New York Bankruptcy Court Judge Sean H. Lane pledged Friday that he will approve the resolution plan of Purdue Pharma, the pharmaceutical company that represents industry abuses in the opioid crisis like few others by aggressively marketing its painkiller OxyContin as if it were non-addictive. The restructuring allows the company, owned by the Sackler family, to emerge from bankruptcy and prepare for its dissolution. The plan includes a deal to pay $7.4 billion in compensation over allegations that it caused one of the largest public health crises in U.S. history.
Nearly every state government, approximately 2,600 cities, counties, Native American tribes, hospitals and other entities seeking to recover costs incurred as a result of the opioid crisis have sued Perdue Pharma and will now be able to collect some of the compensation.
The federal judge thus brings the end of a trial that began almost two decades ago with the first complaints about oxycodone addiction. The company filed for bankruptcy in 2019 amid an avalanche of claims from stakeholders, and the case went to New York state bankruptcy court. “I announce to you now that I will confirm the plan,” Lane said during a hearing in White Plains, New York. The final ruling is expected to be published next Tuesday.
The Purdue Pharma case is paradigmatic of the opioid epidemic that has ravaged the United States in recent years. He produced the painkiller OxyContin and marketed it so aggressively that it became the first drug prescribed by doctors for chronic pain. The pills have gripped thousands of Americans, creating the worst health crisis since AIDS in the 1980s and the pandemic. Drug addiction is estimated to have caused more than 700,000 deaths over the past two decades. Consumption of oxycodone, the active ingredient in OxyContin, has been the gateway for thousands of patients to fentanyl, a synthetic drug 50 times more potent than morphine.
“In March 2025, Purdue Pharma filed a new plan of reorganization under Chapter 11 (which governs bankruptcy proceedings) and the corresponding information declaration in the United States Bankruptcy Court for the Southern District of New York,” the company said in a statement explaining that this plan can now be put into action. “A new public benefit corporation, dedicated solely to improving the lives of Americans, will be created after emerging from bankruptcy,” he adds.
The plan includes a reserve of $7.4 billion in cash to compensate victims and mitigate the opioid crisis, assuming the participation of all creditors, the company says. They must accept the agreement to receive full payments. “Alternatively, creditors may retain the right to take legal action against shareholders if they do not accept releases of shareholder rights included in the plan,” it adds.
Purdue Pharma filed for bankruptcy in 2019 after receiving more than 600,000 lawsuits over opioid addiction problems with its flagship drug, OxyContin. The bankruptcy process generated over $40 billion in claims against the company. The year after it began bankruptcy proceedings, the company pleaded guilty to federal conspiracy and fraud charges for its aggressive business practices.
The case is historic for the severity of the damage caused to thousands of people in the United States, for the amount of compensation, but above all for the decision of the United States Supreme Court to annul a previous agreement in 2024 for the resolution of the company. With the previous agreement, the owners of the company, the millionaire Sackler family, committed to contributing 6 billion euros to cover compensation, but obtained protection from possible civil liability and fraud claims against the family, which controlled the company and which for years received large dividends. Following this decision, the parties had to renegotiate another restructuring plan.
That Supreme Court ruling transformed the treatment of claims bankruptcies because ever since, in claims bankruptcy cases, blanket relief from liability by business owners is not permitted when not all opioid-related claimants agree to the settlement.
Under the new agreement, the Sacklers will provide approximately $6.5 billion in installment payments over 15 years. Following the Supreme Court’s decision, creditors were given the option to not waive their claims against the family that owns Perdue Pharma, according to Bloomberg. Funds from the settlement will be used to try to reduce opioid use, while another $850 million will be used to compensate individuals and families with addiction-related claims.
Purdue will transfer its business operations to a public benefit company called Knoa Pharma, which will develop and distribute drugs to reverse opioid overdoses and treat addiction. It will also continue to market OxyContin, but in a more controlled manner and for specific cases. Its profits will go to fund anti-addiction research.
