In Purdue Pharma bankruptcy settlement, OxyContin's many victims may receive nothing at all

A former member of the creditors committee managing Purdue's bankruptcy speaks out about deliberations

Published January 25, 2022 5:45AM (EST)

Purdue Pharma headquarters stands in downtown Stamford, April 2, 2019 in Stamford, Connecticut. Purdue Pharma, the maker of OxyContin, and its owners, the Sackler family, are facing hundreds of lawsuits across the country for the company's alleged role in the opioid epidemic that has killed more than 200,000 Americans over the past 20 years. (Drew Angerer/Getty Images)
Purdue Pharma headquarters stands in downtown Stamford, April 2, 2019 in Stamford, Connecticut. Purdue Pharma, the maker of OxyContin, and its owners, the Sackler family, are facing hundreds of lawsuits across the country for the company's alleged role in the opioid epidemic that has killed more than 200,000 Americans over the past 20 years. (Drew Angerer/Getty Images)

When I was appointed by the Department of Justice to serve on the creditors committee in the landmark Purdue Pharma bankruptcy, I knew getting justice was the longest of long shots. The company that gaslit America's opioid overdose crisis filed for bankruptcy in September 2019, in order to settle over 2,700 lawsuits for their role in getting millions hooked on their opioid products. As someone in long-term recovery from an opioid addiction that began with OxyContin, a Purdue product, I felt a moral calling to help dismantle Purdue. Purdue nearly destroyed my life. They certainly destroyed countless others. Serving on this committee was my only chance to make sure my community — a community of survivors, victims, and families — got any direct compensation for the indescribable destruction we experienced through Purdue's greed, which was then owned by members of the infamous Sackler family.

Yet I soon found the creditors' committee had far less power than I had been led to believe. For over two years, the creditors committee met virtually due to COVID-19, spending countless hours trying to hammer out a settlement. Sadly, the victims on the committee were outnumbered by corporate interests (five corporate members to four victim members).

This also meant that victims' interests were unevenly represented as well. Indeed, many of Purdue's victims are nearly bankrupt themselves, after years of trying to pay for treatment, seek medical care for addiction, and burying family members. We are broken-hearted, with many of us mourning the deaths of our loved ones. We are waiting for the next overdose or batch of illicit fentanyl to kill off our friends. And we are saddled with the stigma of addiction, which prevents us from getting the help so many of us are dying for.

On December 16, 2021, Judge Colleen McMahon of the U.S. District Court for the Southern District of New York overturned the Purdue Pharma settlement plan. The plan, which was approved in September by bankruptcy judge Robert D. Drain, released Purdue's billionaire owners — members of the Sackler family — from civil liability in opioid-related cases in exchange for a $4.5 billion contribution to the settlement. Judge McMahon's decision to overturn the plan based on the contested Sackler family releases offering civil immunity was the right decision, but it came with a heavy price tag to victim compensation. As negotiations begin around a possible new settlement, direct victim compensation must come first — not last.

As the former co-chair of the official unsecured creditors' committee in the Purdue case, the only statutory body representing over 600,000 claims against Purdue, I had a front row seat to the painstaking negotiations. When it came to direct reparations, victims were, again and again, pushed to the back of the line, behind corporate and government interests. People who had lost everything to OxyContin — the product created by Purdue and pushed on an unsuspecting public — were due to receive a mere 7.5% of the total settlement. The remaining 92.5% went to government and corporate interests.

That plan was, ultimately, overturned. But the new plan could be worse — and victims are now at risk of going home empty-handed.

Most of us whose lives were destroyed by Purdue's crimes never wanted to see members of the Sackler family — who caused so much pain, death, and destruction to our families and communities — walk away with their billions intact. We also aren't willing to surrender our lion's share of the settlement to state and federal government creditors, who are currently renegotiating Purdue's bankruptcy plan and have blurred the lines between direct victim compensation and funds to provide future addiction treatment.

The issue isn't the bankruptcy court's civil immunity for the Sacklers. It's the "either-or" choice between releasing the Sacklers or relinquishing the small settlement that victims deserve. Victims have been held hostage — when in reality, we should be able to both hold the Sacklers to meaningful accountability and protect direct victim compensation.

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As it stands today, eliminating the Sackler releases also eliminates the $750 million that was to be divided among over 138,000 victim creditors. Without the Sacklers' substantial financial contribution to the overall settlement, there is no guarantee that victims will receive any compensation for the life-shattering losses they suffered. The U.S. Department of Justice has an obligation protect the victim claims and prosecute members of the Sackler family criminally, or victims will lose both their settlement and any chance at meaningful justice.

The claims process for victims was arduous. Unlike state attorneys general, individual victims had to present "proof" of harm, including medical records, receipts, and death certificates that drew a direct line of causation to Purdue. Victims were subjected to a humiliating process that required producing evidence of a death, sky-high expenses from treating an addiction, or the birth of a child exposed to OxyContin during pregnancy. Many of us, including myself, had a difficult time "proving" a direct link between our life-threatening opioid addiction and Purdue, and will likely receive the minimum payout of $3,500. Those who came up with the receipts would receive a tiny fraction more — way less than what they deserve.

Considering the cost of addiction treatment, funerals, emergency room bills, and the other outcomes victims have suffered, an average amount of $5,400 per victim isn't fair. It isn't even close to fair. It's an insult.

Yet, even this small sum runs the risk of disappearing in the legal mire. Victim compensation as originally negotiated ranged from $3,500 to $48,000. Even in the most qualified cases, the latter is not enough to cover a loved one's medical bills and funeral expenses. It's certainly not enough to compensate for the loss of a loved one. Judge McMahon has ruled that the Sacklers won't get their civil immunity. As a result, without finding money from a different source other than the Sacklers, there is no money left over for victims' claims, either. Individuals who have endured the worst will never see a dime of the money they deserve.

This is unacceptable. Preventing future harm, such as providing funding for future treatment programs, is not the same thing as compensating for past harm. States have other funding streams to implement their treatment programs — such as the taxes we pay as citizens — and do not need to deprive victims of their rightful share in the bankruptcy plan. We must hold the Sacklers accountable while ensuring the victims don't lose what's left of their $750 million allocation.

Victims must be front and center. Every claim in the Purdue case is built on the victims' suffering, yet the victims themselves have been shoved aside by larger interests. Now that the Sacklers' $4.5 billion is no longer on the table, government creditors must come to the table to ensure that under any new plan, direct victim compensation is protected.

The Department of Justice's (DOJ) October 2020 settlement with Purdue presents an opportunity for the biggest creditor in the bankruptcy to finally stand up for the smallest. After years of hard work by the FBI and its partners to combat the opioid overdose crisis in the U.S., the DOJ announced a global resolution of its investigations into Purdue Pharma. Purdue agreed to plead guilty to a three-count felony: one count of dual-object conspiracy to defraud the United States and to violate the Food, Drug, and Cosmetic Act, and two counts of conspiracy to violate the Federal Anti-Kickback Statute. The resolution includes the largest penalties ever levied against a pharmaceutical manufacturer, including a criminal fine of $3.544 billion and $2 billion in criminal forfeiture. Purdue also agreed to a civil settlement of $2.8 billion to resolve its civil liability. The Sackler family agreed to pay $225 million in damages. Approximately $1.35 billion of these criminal fines were levied against Purdue in bankruptcy court as a "super" priority claim — meaning the DOJ would get paid first when bankruptcy dollars are finally distributed.

The resolution only included fines — and the DOJ did not rule out the possibility of criminal prosecution against members of the Sackler family, although they have yet to indicate any intention to press formal charges.

RELATED: Sackler embraced plan to conceal OxyContin's strength from doctors, sealed testimony shows

Part of the settlement was that the DOJ would use their "super" priority claim of $1.35 billion in the bankruptcy to release to states and local governments for addiction treatment services. Now that the plan has been overturned by the district court, the federal government is set to keep that money or renegotiate terms under a new bankruptcy plan.

Now, through the renegotiation process, victims may receive nothing. Zero. Zip. For me, that means a decade of misery, sickness, and despair because of Purdue, with nothing owed to me for their crimes. Every time I used, my life was at risk. I lost jobs, was homeless, and panhandled to pay for my OxyContin prescription. There is no price tag on what I suffered. Many of my friends lost far more than me.

That is why any new DOJ settlement must cover the victims' claims in the case before any dollars go toward preventing future harm. Over 138,000 victims currently have one realistic path towards reparations, and that's in the Purdue Pharma bankruptcy. Rather than push victims to the back of the line, we should be first. All other groups' claims are based on our suffering, yet we are treated like second-class citizens when we ask for our fair share.

We must hold the Sacklers accountable in front of a jury of their peers, and ensure victims aren't upended by this recent decision. It's time for the DOJ to intervene and protect victims. They have the authority to negotiate terms in their settlement and bankruptcy claim. They can guarantee that $750 million is set aside for direct victim compensation and protected at all costs. They must do this, even if that means forfeiting a piece of their $1.35 billion "super" priority claim to do so.

People, not corporate or government interests, must be first. A state does not bury its only child. And an insurance company does not mourn its best friend. Government does not suffer the same way we do. Victims have carried the burdens of Purdue's crimes for too long and we deserve reparations for that suffering. Given the recent uprooting of the former plan, it's the responsibility of the federal government to put people first. Putting us last will only end more lives — and perpetuate the tragic losses that we have already endured.

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By Ryan Hampton

Ryan Hampton is a nationally recognized recovery advocate, community organizer, and person in long-term recovery. He is the author of "Unsettled: How the Purdue Pharma Bankruptcy Failed the Victims of the American Overdose Crisis." Follow him on Twitter: @RyanForRecovery

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Addiction Commentary Opioid Crisis Oxycontin Purdue Pharma Sackler Family