Sacklers Withdrew $10 Billion Out of Purdue, Report Finds
(Bloomberg) -- Opponents of the Sackler family’s offer to settle opioid lawsuits against Purdue Pharma LP for about $10 billion say a new report showing the clan withdrew more than that out of the drugmaker over the last decade confirms their reasons for rejecting it.
An audit -- commissioned as part of Purdue’s bankruptcy -- found family members transferred $10.4 billion out of the maker of the once-ubiquitous opioid painkiller OxyContin since 2008, sometimes directing it into offshore trusts and holding companies.
The report revives calls for the billionaire Sackler family to open its books about profits from sales of OxyContin after it was approved in 1995. Some state attorneys general and lawyers for U.S. cities and counties are demanding the family pay more to resolve about 2,700 lawsuits alleging the company and the family inflamed the opioid crisis by illegally pushing OxyContin.
“We need full transparency into their total assets and must know whether they sheltered them,” New York Attorney General Letitia James said in an emailed statement. She’s among 24 state law-enforcement officials opposing the Sacklers’ offer to settle.
The family has offered to pay at least $3 billion in cash. The rest of the $10 billion settlement would be made up with the family handing over the company’s operations to a trust controlled by states, cities and counties, and selling its U.K.-based Mundipharma unit. James and other critics have cast a skeptical eye on the Sacklers’ valuations of those assets.
“The Sacklers pocketed billions of dollars from Purdue while thousands of people died from their addictive drugs,” Massachusetts Attorney General Maura Healey said in a statement. “This is the very definition of ill-gotten gains.”
A lawyer for the Sackler family said much of the $10.4 billion the report highlighted was either paid out in taxes or reinvested in businesses slated to be turned over to the states and municipalities. According to the report, $4.12 billion went to cash distributions to the family, $1.54 billion was reinvested into their other companies, and $4.68 billion was used to pay taxes.
”These distribution numbers were known at the time the proposed settlement was agreed to by two dozen attorneys general and thousands of local governments,” Daniel Connolly, an attorney for the Raymond Sackler family, said in a statement. “They have been public for months, and this filing reflects the fact that more than half was paid in taxes and reinvested in businesses that will be sold as part of the proposed settlement.”
Purdue filed for Chapter 11 protection in September to deal with the lawsuits seeking reimbursement for the societal costs tied to opioid overdoses and addictions.
The 350-page report, prepared by Alix Partners, a consulting firm Purdue hired to help shepherd the drugmaker through bankruptcy, focuses on disbursements to the Sacklers after the company and three top executives pleaded guilty in 2007 to criminal charges tied to OxyContin’s marketing. A Purdue unit agreed to pay $630 million as part of the plea deal. None of the executives served any time in jail.
From 1995 to 2007 -- the first 12 years OxyContin was on the U.S. market -- the Sackler family got more than $1 billion in Purdue payouts, the audit found. From 2008 to 2017, the transfers from the company topped $10 billion. The later payments were guided into trusts set up in traditional tax havens, such as the British Virgin Islands and Luxembourg.
A bankruptcy judge in White Plains, New York, is overseeing Purdue’s efforts to use its Chapter 11 filing to facilitate a settlement of its opioid liability. He’s barred suits from going forward while the talks continue.
The case is Purdue Pharma LP 19-23649, U.S. Bankruptcy Court for the Southern District of New York (White Plains).
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