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States, Cities Eye $26 Billion Deal: Opioid Litigation Explained

July 26, 2021, 9:31 AM

State attorneys general say they have a $26 billion dollar plan to resolve the bulk of the liability for the three biggest drug distributors and one major drugmaker that are entangled in the nationwide opioid litigation.

The opioid crisis killed nearly 841,000 people since 1999, including 69,710 last year alone. Plaintiffs in thousands of suits say drugmakers and distributors produced and promoted strong painkillers for a massive profit, not heeding their addictive qualities.

More than 3,000 lawsuits filed by cities and counties against the various players in the opioid supply chain have been combined into one docket known as a multidistrict litigation, or MDL.

At least 95% of the nearly 36,000 local governments that are eligible to sue would need to buy into the $26 billion settlement for it to become finalized. If the lawyers can’t drum up enough support in the next 150 days, the proposal goes away.

1. What Would the Settlement Do?

Three distributors of prescription opioids—McKesson Corp., Cardinal Health Inc., and AmerisourceBergen Corp.—would pay $21 billion over 18 years. Drugmaker Johnson & Johnson would pay $5 billion over nine years.

Most of the money is to be spent by the states on abatement—treatment, prevention, and education about addiction. A small share will be earmarked for any use that the local governments and states see fit.

The settlement would also require the three drug distributors to create and participate in a database to track the distribution of opioid pills. It would pinpoint large orders of pills placed in one county or by one pharmacy and prevent the distributors from sending more if it appears someone is trying to obtain a high volume.

It’s an unusual requirement because it means the three biggest distributors in the market will know how much each competitor has sent and will be required to notify federal officials and hold back a shipment when red flags emerge.

2. So That Ends the MDL, Right?

No, but it would resolve some of the biggest pieces of the litigation. The three distributors control more than 85% of the market in the U.S., and Johnson & Johnson has some of the deepest pockets of all the drugmakers sued over the opioid crisis.

If this settlement is finalized, the MDL will continue with the remaining defendant pharmacies—Walgreens Boots Alliance Inc., Walmart Inc., Rite Aid Corp., and CVS Health Corp.—which have long maintained they have no responsibility in the crisis. Local governments say pharmacies reaped profits without asking questions during the opioid prescription boom of the early 2000s.

Drugmakers Teva Pharmaceuticals Industries Ltd., Endo Pharmaceuticals Inc. , and Allergan Inc. also are still defendants in the MDL, looking for their own settlement agreement.

3. Will the Settlement Be Finalized?

We don’t know. Some of the plaintiffs immediately rejected the settlement offer.

Washington State Attorney General Bob Ferguson publicly rejected the settlement proposal as grossly insufficient. West Virginia Attorney General Patrick Morrisey has said the state will probably oppose it.

Several attorneys general proposed an even bigger settlement last year, and it fell apart because they couldn’t get support from enough of the parties in the litigation. The difference this time is that the attorneys who represent the vast majority of the roughly 3,000 cities and counties that have filed lawsuits against the opioid supply chain are actually on board with this proposal.

4. Are There Other Opioid Cases?

Yes, lots of them. Even if the minimum 95% of local governments buy into the settlement, that would still leave nearly 1,800 cities and counties that would continue to fight their own lawsuits individually against the three distributors and J&J.

Three drug manufacturers—Allergan, Teva, and Endo—along with regional distribution companies and pharmacies remain as defendants in a separate New York case that’s considered a bellwether for other plaintiffs.

AbbVie Inc., Teva, and Endo also are defendants in separate state and federal trials in New York and Orange County, Calif. They are expected to face another trial in San Francisco along with the pharmacies later this year. The pharmacies, which settled the New York case shortly before trial, also go to trial in Ohio in October.

Endo is headed to trial in a lawsuit brought on behalf of counties in Tennessee and an infant allegedly born addicted to opioids. In that case, a judge has already ruled the company liable.

Meanwhile, the Justice Department objected to the proposed bankruptcy settlement for OxyContin manufacturer Purdue Pharma, saying the deal is illegal because it offers too much protection for members of the Sackler family from future opioid-related claims.

5. Has Anything Actually Been Resolved?

Yes. Many drug companies have already reached smaller settlements and judgments. The state of Oklahoma will get $465 million from J&J for the company’s role in the opioid crisis. J&J is still appealing the ruling.

Similarly, two Ohio counties reached a $260 million settlement with McKesson, Cardinal Health, AmerisourceBergen, and Teva, averting a trial. The counties also reached a $20.4 million settlement with J&J.

To Learn More:

—From Bloomberg Law
J&J, Distributor Deal Sets Stage for Next Opioid Legal Frontier
Teva, Purdue, Other Opioid Makers Head to California Trial (1)
Lost Leverage Complicates Opioid Deal Talks for Cities, Counties
Entire Opioid Supply Chain Faces First Test in New York Case (1)

—From Bloomberg
J&J, Distributors Unveil $26 Billion Opioid Deal With States (2)
Purdue Pharma’s Opioid Settlement Plan Faces DOJ Objections
First Opioid Jury Trial Marks High-Stakes Test for Drug Industry
Pharmacies Face Peril Without Opioid Settlements, Judge Says
States Nix $18 Billion Opioid Sellers’ Settlement Offer (2)

To contact the reporter on this story: Valerie Bauman in Washington at vbauman@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com

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