Frustration grows as opioid settlement funds remain frozen

More than a year after OxyContin maker Purdue Pharma reached a tentative settlement over the toll of opioids that was accepted nearly universally by the groups suing the company — including thousands of people injured by the drug — money is still not rolling out.

Parties waiting to finalize the deal are waiting for a court to rule on the legality of a key detail: whether members of the Sackler family who own the company can be protected from lawsuits over OxyContin in exchange for handing over up to $6 billion in cash over time plus the company itself.

This week — days before the one-year anniversary of the April 29, 2022, appeals court arguments on the matter — lawyers told judges that the wait is causing problems.

Lawyers on multiple sides of the case, including those representing Purdue, asked the 2nd U.S. Circuit Court of Appeals in New York to issue a ruling or provide an update soon, saying the efforts to use the funds to fight the opioid crisis can’t begin until the money can start to flow.

While it’s not unusual for an appeals panel to take a year or more from a hearing until it releases a decision, this case was originally fast-tracked by the court. At the hearing last year, there were signs that the 3-judge panel might not rule unanimously.

A lawyer for creditors told a U.S. bankruptcy court in another filing this week that the wait is a problem for other reasons. The lawyer, Arik Preis, wrote that as long as the funds aren’t distributed, “the vast majority of more than $6 billion that could be put to use to abate the opioid crisis and compensate individual claimants continuing to accrue interest in Sackler accounts.”

While most of Purdue’s creditors have signed onto the settlement, the U.S. Bankruptcy Trustee is objecting.

With the case stretching out, the legal costs continue to mount, too. Purdue reported in a court filing that as of March 31, it had spent about $900 million on nonrecurring legal fees since it filed for bankruptcy in 2019 as part of an effort to settle its lawsuits. Purdue’s proposed settlement is not the biggest in a series of opioid-related settlements in recent years that totals over $50 billion, but it is large and closely watched because of the blame many have given the company for its role in sparking the crisis with its marketing of OxyContin starting in the 1990s.