On September 15, 2019, Purdue Pharma filed for Chapter 11 bankruptcy protection, setting in motion one of the most consequential and contested legal proceedings in American healthcare history. The bankruptcy was intended to resolve thousands of lawsuits alleging that Purdue's aggressive marketing of OxyContin had fueled the opioid epidemic. What it produced instead was a years-long legal battle over whether the Sackler family — who had extracted billions from Purdue before the filing — could use the bankruptcy process to shield themselves from personal liability.
The Purdue Pharma bankruptcy is the story of how a family that made billions selling a drug that killed hundreds of thousands of Americans attempted to use the legal system to limit their financial exposure — and how that attempt was ultimately, partially, blocked by the Supreme Court of the United States. It is also the story of the limits of the legal system as a mechanism for accountability when the wrongdoers are wealthy enough to hire the best lawyers in the country and patient enough to litigate for years.
Purdue Pharma introduced OxyContin in 1996. The drug was a controlled-release formulation of oxycodone, a powerful opioid, and it was marketed aggressively to physicians as a safe, effective treatment for chronic pain with a low risk of addiction. The marketing claims were false. The controlled-release formulation could be defeated by crushing the pill, and the drug was highly addictive. Purdue knew this — internal documents later revealed in litigation showed that company officials were aware of widespread abuse of OxyContin within years of its launch.
The marketing campaign was extraordinary in its scope and sophistication. Purdue deployed a sales force of more than 900 representatives who visited physicians across the country, providing gifts, meals, and speaking fees to doctors who prescribed OxyContin. The company funded continuing medical education programs that promoted the concept of "opiophobia" — the idea that physicians were undertreating pain because of unfounded fears about addiction — and sponsored patient advocacy organizations that amplified this message.
The results were catastrophic. OxyContin became one of the most widely prescribed drugs in the United States, and its abuse drove a surge in opioid addiction that killed hundreds of thousands of Americans over the following two decades. When OxyContin was reformulated in 2010 to make it harder to abuse, many addicted patients switched to heroin and, later, illicitly manufactured fentanyl — transitions that drove the second and third waves of the opioid epidemic.
Between 1999 and 2019, approximately 450,000 Americans died from opioid overdoses. The economic cost of the opioid epidemic has been estimated at more than $1 trillion. Emergency departments across the country were transformed by the epidemic: overdose became one of the leading reasons for ER visits, and emergency physicians became the de facto front line of a public health crisis that the healthcare system was not equipped to handle.
By 2019, Purdue Pharma faced more than 2,600 lawsuits from state and local governments, Native American tribes, hospitals, and individuals alleging that the company's marketing of OxyContin had caused the opioid epidemic and the enormous costs associated with it. The lawsuits were filed in federal and state courts across the country, and many had been consolidated in a federal multidistrict litigation in the Northern District of Ohio.
The Sackler family — who owned Purdue through a complex web of trusts and holding companies — had been withdrawing money from the company for years before the bankruptcy filing. Between 2008 and 2018, the Sacklers extracted approximately $10.7 billion from Purdue in dividends and other payments. The withdrawals accelerated after 2018, when it became clear that the litigation posed an existential threat to the company. In 2019 alone, the Sacklers withdrew approximately $1 billion from Purdue.
The bankruptcy filing on September 15, 2019, was accompanied by a proposed settlement framework in which the Sackler family would contribute approximately $3 billion to a settlement fund in exchange for a broad release from civil liability — a release that would protect not only Purdue but the Sacklers personally, even though they had not themselves filed for bankruptcy. The proposed release was unprecedented: it would have used the bankruptcy process to extinguish claims against non-debtors who had not sought bankruptcy protection.
The Third-Party Release Controversy
The Purdue bankruptcy proposed to use a legal mechanism called a "third-party release" to extinguish claims against the Sackler family — individuals who had not filed for bankruptcy themselves. This mechanism, which is available in some circuits but not others, was at the center of the legal battle that ultimately reached the Supreme Court. Critics argued that allowing wealthy individuals to use a corporate bankruptcy to shield themselves from personal liability would create a roadmap for other wealthy wrongdoers to escape accountability.
The Purdue bankruptcy proceeded through the courts for nearly five years. The bankruptcy court approved a reorganization plan in 2021 that included the third-party release for the Sacklers, who agreed to contribute approximately $4.5 billion to the settlement — an increase from the original $3 billion proposal. The plan was opposed by the U.S. Trustee, a Justice Department official who oversees bankruptcy proceedings, and by several state attorneys general who argued that the third-party release was unlawful.
The Second Circuit Court of Appeals affirmed the bankruptcy court's approval of the plan in 2023. The U.S. Trustee appealed to the Supreme Court, which agreed to hear the case. In June 2024, the Supreme Court ruled 5-4 that the third-party release for the Sacklers was unlawful — that the bankruptcy code did not permit a reorganization plan to extinguish claims against non-debtors who had not themselves filed for bankruptcy.
The Supreme Court's ruling sent the case back to the lower courts to develop a new reorganization plan without the third-party release. The Sacklers, facing the prospect of personal liability, ultimately agreed to a revised settlement in which they would contribute approximately $6.5 billion — an increase of $2 billion from the prior agreement — in exchange for a more limited release that did not extinguish all civil claims against them.
The revised settlement was approved in early 2025. The total Sackler contribution of approximately $6.5 billion, combined with Purdue's own assets, produced a settlement fund of approximately $10 billion — the largest opioid settlement in history. The funds are being distributed to state and local governments, treatment programs, and victim compensation funds over a period of years.
The $10 billion settlement is the largest financial accountability for the opioid epidemic achieved through litigation. But it must be measured against the scale of the harm. The opioid epidemic has killed more than 500,000 Americans since 1999 and cost the economy more than $1 trillion. The Sackler family's $6.5 billion contribution represents a fraction of the wealth they accumulated from OxyContin — the family's net worth, even after the settlement, is estimated at approximately $7 billion.
No member of the Sackler family has been criminally convicted for their role in the opioid epidemic. Purdue Pharma pleaded guilty to federal criminal charges in 2020 and agreed to pay $8.3 billion in fines and forfeiture — but as a company in bankruptcy, the practical effect of the criminal fine was limited. The Justice Department declined to pursue criminal charges against individual Sackler family members, a decision that has been criticized by victims' advocates and some legal scholars.
The settlement funds are being used to support opioid treatment and prevention programs across the country. Emergency departments — which bear a disproportionate share of the clinical burden of the opioid epidemic — are among the intended beneficiaries of the settlement funds, though the distribution process has been slow and the amounts reaching individual hospitals have been modest relative to the costs they have incurred.
Emergency departments have been on the front line of the opioid epidemic since its beginning. Opioid overdose is one of the leading reasons for emergency department visits in the United States, and emergency physicians have developed and refined the protocols for treating overdose — including the widespread use of naloxone (Narcan) for opioid reversal — that have saved hundreds of thousands of lives.
Emergency physicians have also been at the center of the debate over medication-assisted treatment (MAT) for opioid use disorder. A landmark 2015 study by Dr. Gail D'Onofrio at Yale demonstrated that initiating buprenorphine treatment in the emergency department — rather than simply referring patients to outpatient treatment — significantly increased treatment engagement and reduced illicit opioid use. The study transformed emergency medicine's approach to opioid use disorder and has been credited with saving thousands of lives.
The Purdue bankruptcy settlement funds are intended in part to expand access to MAT and other evidence-based treatments for opioid use disorder. Whether the funds will be sufficient to address the scale of the crisis — and whether they will reach the emergency departments and community health centers that are most in need — remains to be seen.
500,000+
Americans killed by opioid overdoses since 1999
$10.7B
Extracted by Sacklers from Purdue (2008–2018)
2,600+
Lawsuits against Purdue at time of bankruptcy filing
$6.5B
Final Sackler family contribution to settlement
$10B
Total opioid settlement fund (largest in history)
0
Sackler family members criminally convicted