Purdue Pharma Officially Shuts Down as Opioid Settlement Is Finalized

Purdue Pharma, the maker of OxyContin, officially ceased operations Friday, ending the legal existence of the company widely blamed for triggering the worst drug crisis in American history and clearing the path for a $7.4 billion opioid settlement to begin reaching victims.

The dissolution comes four days after U.S. District Judge Madeline Cox Arleo sentenced the company in Newark federal court to $5.5 billion in criminal penalties — $3.544 billion in fines and $2 billion in forfeiture — stemming from a 2020 guilty plea to charges of paying kickbacks to doctors and deceiving federal regulators about OxyContin’s risks.

From Sentencing to Shutdown

The criminal resolution was the final legal step before Purdue could dissolve in bankruptcy. Under the terms of the plea deal, the Justice Department will collect $225 million of the $5.5 billion penalty upfront; the remainder flows through the settlement process to states, local governments, and individuals harmed by the epidemic.

Before sentencing last Tuesday, Judge Arleo sat through nearly seven hours of testimony. More than 40 people spoke in court and more than 200 sent written statements, describing lost relatives, wrecked careers, and communities still recovering from the surge in opioid prescriptions Purdue drove through the late 1990s and 2000s.

What Replaces Purdue

The company will not simply dissolve and leave nothing behind. Per the settlement terms, Purdue’s remaining operations transition to a new entity called Knoa Pharma, whose board will be appointed by state attorneys general rather than the Sackler family or private shareholders.

Knoa carries no obligation to generate profit. Its stated mission is to produce and distribute opioid use disorder treatments and overdose-reversal medications, including naloxone. The new company will be owned by an independent foundation.

The Money and the Sacklers

The Sackler family, whose members controlled Purdue and oversaw its aggressive marketing of OxyContin, agreed as part of the settlement to pay up to $7 billion over 15 years. They contributed an additional $100 million to the individual victims’ fund above their earlier commitments.

Of the $7.4 billion total settlement, roughly $865 million is set aside for direct payments to individuals. Expected disbursements range from approximately $8,000 to $16,000 per claimant, depending on documented harm. The remaining funds will reimburse state and local governments for opioid-related costs and support addiction treatment and prevention programs.

A Quarter Century of Damage

Purdue launched OxyContin in 1996 and built its business around marketing the drug as safer and less addictive than earlier opioids — a claim that internal documents and court proceedings later showed the company knew was misleading. Prescriptions expanded well beyond surgical and cancer patients into routine pain management, feeding dependency rates that eventually pushed many users toward cheaper street alternatives as prescriptions became harder to obtain.

More than 500,000 Americans have died of opioid overdoses since 1999, according to the Centers for Disease Control and Prevention. That figure spans prescription opioids, heroin, and illicit fentanyl, all tied in part by researchers to the prescription flood Purdue helped create.

The bankruptcy and criminal resolution, contested and restructured over nearly a decade of litigation, closes the corporate entity at the center of that history. The settlement payments will take time to distribute. Knoa Pharma has work to prove. But Friday, the company itself stopped existing.