We are lucky today to have Professor Rich Hynes of the UVA Law school faculty to help us understand all this.
In previous episodes of Mountain Money, we have touched on the practices of Purdue Pharma and its owners the Sackler family. Introduced in 1995, Purdue’s flagship product Oxycontin was aggressively promoted as providing safe and long-lasting pain relief with reduced addiction risk due to its time-release properties.
In fact, Oxycontin was highly addictive and Purdue was aware that it was crushed and snorted and was being massively over-prescribed. The result was widespread addiction and abuse.
And boy did it sell. Between 1995 and 2017, Oxycontin resulted in a staggering $35 billion dollars in revenue to Purdue. By January 2019, some 36 states and other entities were suing Purdue for the damage caused by the opioid epidemic.
Purdue chose to file bankruptcy consistent with a tentative settlement reached with some of the states suing it. Other states focused on the fact that the Sackler family had withdrawn some $10.7 billion from the company since the company had come under legal scrutiny and objected to the proposed bankruptcy plan which would have shielded the family from future personal liability. Nonetheless, it was initially approved by the bankruptcy court but then overturned at the District Court level.
So how would the bankruptcy have worked? Would the result have been fair to the states and the many families hurt by the opioid scourge? Who were the key players in the bankruptcy process and how did it work? Most importantly what was the third party release provision that would have shielded the Sacklers from further personal liability and why did the District Court reject it?
We are lucky today to have Professor Rich Hynes of the UVA Law school faculty to help us understand all this.
