Some of the world’s largest opioid distributors are fighting off a law meant to combat street drug empires as Michigan opens a new legal front that could serve as a model for other states.
In a 100-page complaint filed Dec. 17, Attorney General Dana Nessel (D) contends that some of the industry’s titans—Walgreens, McKesson, Cardinal Health, and AmerisourceBergen—have entered the “illegal drug market.” That makes them liable for damages under the Drug Dealer Liability Act because they should have known large distributions of pills were being diverted and abused, the state alleges.
The 1994 statute was meant to give victims and prosecutors another tool to combat crack in the 1990s. Some district attorneys and local governments have brought claims under the statute, but Nessel’s lawsuit is the first time a state attorney general is advancing the legal theory amid the wave of opioid marketing lawsuits filling state and federal courts. The thousands of lawsuits seek cash to pay for opioid addiction treatment.
The complaint, which also alleges negligence and public nuisance, may be a model for dozens of other states looking to increase settlement pressure on opioid distributors and drugmakers by lumping in the pain-pill industry with crack and cocaine enterprises, Peter Jacobson, a University of Michigan health law and policy professor, said.
“You’re really making a claim that this is almost criminal in nature. This is the use of a drug law to go after a legitimate distributor, and it’s almost like a RICO case,” he said. “It just sounds like a more sinister claim. What I suspect is that Attorney General Nessel’s complaint will be the template going forward assuming that states have similar laws.”
A state RICO statute is being used by Tennessee in a case against AmerisourceBergen. Attorney General Herbert H. Slatery III (R) asserts that the company was the biggest distributor in the state between 2006-2014, shipping more than 700 million opioid dosages in that time. The complaint, filed Oct. 3 and unsealed Dec. 19, also makes public nuisance allegations.
From Conservative Law to Aggressive Claim
The statute on which Nessel relies is Michigan’s version of the Model Drug Dealer Liability Act, a civil statute originally promoted by the American Legislative Exchange Council and on the books in about 20 states. ALEC declined to comment.
That conservative group pushed the bill to combat street crime by creating a theory of liability that could attack drug cartels. It works by imposing “market liability,” allowing a plaintiff to prevail if she can prove that a defendant distributed illegal drugs into a community and caused damage, regardless of whether plaintiffs can pinpoint the role of a defendant in the chain of illegal distribution.
Like dealers of illicit street drugs, the defendants should pay up because they were responsible for more than 75% of the nearly 3 billion opioid pills distributed in Michigan between 2006 and 2012, Nessel alleges. The companies knowingly entered the illegal drug market by supplying drugs they knew were being overprescribed, she alleges.
It’s uncertain how many other attorneys general might be able to bring this type of claim because each state’s statute is different, with some carving out health-care professionals or the pharmaceutical industry, Gerard Stranch, a member of Nashville-based Branstetter, Stranch & Jennings PLLC, said.
Stranch represents plaintiffs in three other Tennessee suits using a version of the Drug Dealer Liability Act. Similar cases have been filed in Georgia and Arkansas under those states’ versions of the law. Those cases were brought by relatives of people who abused opioids rather than by the attorney general, as is happening in Michigan.
“We think that the way we’ve brought this claim is a model in combating the opioid epidemic,” Stranch said. “There’s also going to be a huge deterrent effect from these suits with companies deciding whether they want to push a substance that is sold in an illegal market, whether it’s a performance enhancing drug or an illegal drug like an opioid.”
Distributors Defend Role
Industry defendants deny liability and say that they follow strict federal laws, including by reporting suspicious activity, so they can keep their licenses.
AmerisourceBergen issued a statement in response to Michigan’s lawsuit saying it and other wholesale drug distributors “are responsible for getting FDA-approved drugs from pharmaceutical manufacturers to DEA-registered pharmacies, based on prescriptions written by licensed doctors and health care providers.” Opioid-based products are less than 2% of company sales, it said.
McKesson issued a statement saying that it delivers “life-saving medicines to millions of Americans each day” and that “any suggestion that McKesson drove demand for opioids in this country reflects a fundamental misunderstanding and mischaracterization of our role as a distributor.”
Cardinal Health and Walgreens didn’t respond to requests for comment.
Because the Drug Dealer Liability Act is intended to crack down on criminal activity, the sticking point may be whether the underlying drug distributions were illegal, Jacobson said.
“Unlike the typical drug markets that the law was almost certainly intended to sanction, these opioids do have a very important use in combating pain, including extreme pain for cancer patients or patients following surgery,” he said.
This argument—that these opioids were legal under the company’s licenses—won a dismissal of a case in a Tennessee state court. But that decision was reversed in July by an appeals court, which held that the U.S. regulatory licensing scheme doesn’t block liability under the Drug Dealer Liability Act.
“Drug manufacturers cannot, as is alleged here, knowingly seek out suspect doctors and pharmacies, oversupply them with opioids for the purpose of diversion, benefit from the process, and then cynically invoke their status as otherwise lawful companies to avoid civil liability,” the three-judge panel said in its ruling. “The common perception of a drug dealer may be that of a street dealer, but the DDLA does not make that distinction.”
The first trial under this theory is set to begin in May in Tennessee.
The Michigan case is Michigan v. Cardinal Health, Inc., Mich. Cir. Ct., No. 10-16896-NZ, complaint filed 12/17/19.
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