The Sackler family made billions of dollars on
On Wednesday, U.S. Bankruptcy Judge
As part of the settlement, the Sacklers have agreed to contribute about
The arm of the Justice Department that oversees bankruptcy court has staunchly opposed the deal, setting the stage for an appeal, which Drain’s ruling would have to overcome in order to become final. Matthew Gold of law firm Kleinberg Kaplan, speaking on behalf of some states still opposing the plan, said in court that the deal has “fatal flaws” that could see it overturned on appeal. Gold filed notices of appeal on behalf of the state of Washington and the District of Columbia shortly after Drain concluded his ruling. Drain has said that an appeal would be costly and would hurt communities in need of opioid relief by diverting money to legal fees rather than policing and treatment budgets.
“One cannot put a price on a human life or an injury such as opioid addiction. And yet, that’s what courts do with respect to personal injuries,” Drain said while addressing objections to the plan. “The amount that courts reach is rarely, in terms of dollars, sufficient compensation. That is particularly the case where the wrongdoer is insolvent.”
The deal caps years of political pressure and public outcry over OxyContin, which was first approved by the Food and Drug Administration in 1995. Almost 250,000 people in the U.S. died from opioid overdoses from 1999 to 2019, according to the
The multiweek trial held over Zoom offered a rare moment of visibility from the family, which largely stayed out of public view in recent years. Four members
“Our family cares deeply that OxyContin was part of the opioid crisis, but it was unintentional,” said
Attorneys general for nine states and Washington, D.C., fought the deal, with a handful alleging in court papers that it allows Purdue and the Sacklers to avoid accountability for the role they “played in creating and exacerbating” the opioid epidemic. Almost every U.S. state agreed to support the deal
“This plan is most assuredly not perfect,”
Connecticut Attorney General William Tong, a Democrat who opposed the terms protecting the Sacklers from future lawsuits, said the family will continue to accumulate and build on their dynastic wealth.
“They don’t have to sell any cars, any boats, any houses, any art,” said Tong in a phone interview. “They’re going to be able to fund this from their average investment returns.”
“Not only is that outrageous, that’s unjust,” he said.
After the plan was approved, members of the family descended from the late Mortimer Sackler said that while they “dispute the allegations that have been made about our family, we have embraced this path in order to help combat a serious and complex public health crisis.”
In a separate statement, the family of the late Raymond Sackler said the “resolution is an important step toward providing substantial resources for people and communities in need, and it is our hope these funds will help achieve that goal.”
A representative for Jillian Sackler, widow of Arthur Sackler, made clear that neither Arthur, nor his heirs profited from OxyContin, and that they’re not named in any of the lawsuits brought against Purdue or members of the Sackler family.
The Sacklers were once considered a remarkable example of modern American capitalism, rising from humble Brooklyn roots to combine the fields of advertising and drug development. They amassed one of the world’s largest family fortunes and became titans of global philanthropy, with their name emblazoned on museums in New York and Paris as well as university buildings at Oxford and Harvard.
Over time, they steered profits from the pharmaceutical business into a wide array of ventures. From 2008 to 2017, the family shifted $10.8 billion of cash out of Purdue, though close to half of that went to taxes, according to court documents.
As part of the bankruptcy deal, the Sacklers will relinquish their equity in Purdue; as of 2019, there were no family members left on the board or in management positions. They will also contribute $4.325 billion in cash and forfeit control of family foundations worth $175 million.
The proposed payments will be spread out between now and 2030, reducing their immediate impact. One expert witness engaged by the State of Washington estimated in a report submitted to the court that the Sackler fortune could increase to $14.6 billion by the time the last installment has been paid.
When asked in court if his family might ultimately come out of the deal with more money than it had going in, David Sackler pushed back.
“I don’t think anybody can say that with any certainty,” Sackler said. “As you know, markets go up and down.”
In order to fund the bulk of the cash payments — and as part of the deal to exit the industry — the Sacklers will agree to sell their international pharmaceutical holdings within seven years. That sale could generate something like $3 billion after taxes, according to asset statements provided to the court. The remainder of the settlement will come out of the $8.7 billion in assets that the Sacklers still control outside the drug industry.
The Sackler family will separately pay $225 million to resolve civil allegations brought by the Justice Department over OxyContin marketing and sales tactics.
The multi-generational fortune, split between descendants of brothers Raymond and Mortimer Sackler, is managed by at least four family offices and spans more than a hundred trusts and a web of holding companies, partnerships, legal jurisdictions and strategies. Their assets include billions invested with private equity managers and hedge funds and hundreds of millions in real estate. They also own a small oil & gas company worth an estimated $313 million.
Prolific art collectors, the Sacklers own hundreds of millions of dollars of paintings, jewelry and other collectibles. The art collection alone of Theresa Sackler, Mortimer’s wife, is worth more than $50 million, according to court reports, while Richard Sackler’s collection is estimated at about $26 million. Another $100 million worth of art is owned by the family’s trusts.
Future of the Opioid Epidemic
Meanwhile, the opioid crisis has been felt across the U.S., and its effects have been exacerbated by the coronavirus pandemic. In 2020, drug overdose deaths in the U.S. hit an all-time high of more than 93,000, according to provisional data from the CDC, with a 30% surge over the course of the year. Much of the spike has been driven by a rapid increase in deaths involving illicit synthetic opioids, such as fentanyl.
“Things have never been worse: The numbers don’t lie,” said Caleb Alexander, an epidemiologist at Johns Hopkins Bloomberg School of Public Health in Baltimore, and founding director of its Center for Drug Safety and Effectiveness. “The settlement will mark the close of one chapter, but there are many more to be written.”
Alexander, who has provided expert testimony for plaintiffs in opioid-focused litigation, said that cities and counties are currently under enormous strain. Of the 50 states, 47 saw drug overdoses increase in 2020. In recent years, the increase in synthetic opioid-related overdose deaths has taken a greater toll on Black and Hispanic Americans and American Indian populations.
However, prescription opioids are still some of the most effective analgesics available. “Unless someone develops a better product, the alternative is excruciating pain,” Judge Drain said of OxyContin in 2019. Alexander acknowledged that while they can be extremely harmful, opioids can be hugely valuable: “Like a hammer or a razor blade, it’s about how it’s applied.”
The mounting rate of overdose deaths is posing a significant challenge around the country, said Roger Crystal, chief executive officer of Opiant Pharmaceuticals Inc. of Santa Monica, CA, and inventor of Narcan, a nasal spray used in emergencies to treat opioid overdoses.
“Communities nationwide will be well served if the money from these settlements is used to fund a significant public health response,” he said.
Les Burris, an Orlando, Florida, resident who filed a claim for $4.2 million in the bankruptcy case, lost his 50-year-old wife, Julia, to an opioid overdose. He said the Sackler family is trying to buy its way out of being held responsible for the damage OxyContin has done.
“It’s absolutely terrible,” Burris said of the settlement. “That’s not holding them accountable.”
Future of Purdue
Purdue is one of
The assets will be transferred to a limited liability company called NewCo in court papers whose executives will be chosen by the state governments that sued Purdue. The new company’s goal will be to generate revenue that can be distributed to state and local governments, as well as trusts that focus on groups like Native American tribes, babies born with addictions and people claiming personal injuries tied to opioids.
Purdue says this plan will put more than $10 billion to work fighting opioid abuse. Nearly half of that figure is derived from planned public-health initiatives, namely the discounted distribution of anti-overdose drugs and opioid dependence treatments. This charity has an end date, though. The managers of the new Purdue are obligated sell the company by December 2024 to maximize the amount of money that could be distributed to address opioid woes.
OxyContin has been the most well known, and at times, most prescribed brand-name narcotic medication for treating pain severe enough to require around-the-clock management. From the time the product was introduced, Purdue has fended off generic competition through a robust patent strategy and near-constant litigation.
The drug’s formula has also been tweaked along the way. In 2010, Purdue constructed a reformulated pill that couldn’t be easily crushed and snorted, and would congeal into a jelly-like substance if water was added. These abuse-deterring safeguards allowed for new patents, and thus, a longer period of market exclusivity.
OxyContin generated $2.3 billion in net sales in 2010. “By 2018, that number had dropped over half to $820 million and by 2020 had further dropped to $517 million,” Purdue executives said in filings. OxyContin sales are expected to continue to drop in 2025 and in 2027 when patent protections expire and the product likely serious competition from generic entrants.
Sackler Family Reputation
For the better part of their careers, the Sacklers’s connection to the source of their wealth remained little known. That was by design: When Mortimer and Raymond Sackler bought the original Purdue Frederick for $50,000 in 1952, they decided to keep the name, according to “Empire of Pain,” Patrick Radden Keefe’s biography of the family.
Over the decades, through donations and naming rights with the world’s most prestigious museums and universities, the family made its public name as philanthropists instead, rather than the manufacturers of addicting and overprescribed drugs.
But the power of their charitable contributions has waned. The Metropolitan Museum of Art, the Louvre and other institutions have stripped the name in recent years or distanced themselves from the family. The name remains on the Sackler Library at Oxford and the Raymond and Beverly Sackler Institute for Biological, Physical and Engineering Sciences at Yale. In 2019, Yale decided to stop accepting donations from the family.
From John Rockefeller to Andrew Carnegie, wealthy Americans have long used philanthropy to patch over dubious business records and build a more flattering legacy, said Maribel Morey, a historian of philanthropy and executive director at the Miami Institute for the Social Sciences. The Sacklers have changed the conversation, Morey said, making it harder for institutions to justify accepting their money or putting their name on buildings.
In the case of Carnegie, U.S. senators were put off by his labor practices, but there wasn’t as widespread a public rebuke, and many libraries and universities still bear his name. “I’m seeing a much more pervasive pushback to the Sacklers,” she said.
“A family that has destroyed so many lives should not be able to put its name on our trusted institutions,” Massachusetts Attorney General Maura Healey, a Democrat, said in an emailed statement. “You can’t buy your way to redemption or a good name, no matter how much money you have.”
Morey said that the Sacklers might eventually be welcomed back by universities and nonprofits, which will put up the Sackler name in exchange for big gifts. In an effort to prevent that, a late addition to the bankruptcy settlement bans the family’s naming rights for almost a decade. —With
(Updates fourth paragraph with appeals filed by Washington and D.C.
An earlier version corrected the second paragraph in third section to clarify some proceeds went to taxes.)
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