October 22, 2019

4 state AGs announce settlement framework to resolve thousands of opioid lawsuits

Daily Briefing

    Attorneys general (AGs) from four states on Monday released a framework for a $48 billion agreement with three of the United States' largest drug distributors and other pharmaceutical companies that could settle thousands of lawsuits claiming the companies fueled the opioid epidemic.

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    Background

    More than 2,000 counties, cities, Native American tribes, and others throughout the United States have filed lawsuits against pharmaceutical companies, drug distributors, and pharmacies over their alleged role in fueling the opioid epidemic.

    U.S. District Judge Dan Polster in Cleveland is overseeing a case that consolidates the more than 2,000 lawsuits filed against the pharmaceutical supply chain into one suit, as well as a separate Ohio case that observers said could serve as a "bellwether" for the consolidated case.

    Several parties have reached settlement deals in the Ohio case. For instance, Johnson & Johnson (J&J) earlier this month announced that it had reached a settlement agreement, and Mallinckrodt Pharmaceuticals this month completed a nearly $30 million settlement in the Ohio case. In addition, attorneys on Monday announced the two Ohio counties reached a $260 million settlement with AmerisourceBergen, Cardinal Health, and McKesson—three of the largest drug distributors in the United States—and drugmaker Teva Pharmaceuticals.

    Henry Schein Medical, a small drug distributor, also settled with the Ohio counties, meaning Walgreens Boots Alliance now is the only remaining defendant in the Ohio county case.

    Pharmaceutical companies also face separate lawsuits brought by state AGs.

    AGs from 4 states announce global settlement framework

    AGs from North Carolina, Pennsylvania, Tennessee, and Texas on Monday released a framework for a global settlement that they have reached in principle with AmerisourceBergen, Cardinal Health, J&J, McKesson, and Teva. The framework is being proposed to settle claims brought by state AGs and local jurisdictions in North Carolina, Pennsylvania, Tennessee, Texas, and is being offered to state AGs and attorney's representing local jurisdictions for the remaining 46 states involved in the consolidated case. AGs from the remaining 46 states and attorneys from the local jurisdictions are expected to join the global settlement over the next few days.

    Under the global settlement, the companies would pay $22 billion in cash and contribute $26 billion worth of generic treatments for substance use disorders (SUD), product distributions, and data tracking measures. Pennsylvania AG Josh Shapiro (D) said about $18 billion of the settlement would be paid in cash over the next three years.

    Under the global settlement, each state and its corresponding local government would receive a percentage of the $22 billion in cash to spend on SUD treatments, paramedic services, and telehealth treatment.

    McKesson would pay the highest amount toward the settlement, at $6.68 billion over 18 years. AmerisourceBergen and Cardinal Health would pay about $5.6 billion each over 18 years, J&J would pay $4 billion over two to three years, and Teva would pay $250 million over 10 years and provide $23 billion worth of its generic suboxone product over 10 years.

    The global settlement currently includes no admission of liability. The settlement currently is an "agreement in principle" and has not yet been finalized.

    Comments

    State AGs and attorneys representing the local jurisdictions said the global settlement would offer states, counties, and cities immediate relief. The plaintiffs' attorneys in a joint statement said, "The proposed settlement will make significant progress to abate the epidemic by providing resources for and applying funds directly to necessary opioid-recovery programs."

    North Carolina AG Josh Stein (D) said, "This agreement is an important step in our progress to help restore people's lives. Not only will it provide significant funds and treatment drugs to help people get healthy, it will go a long way in preventing the pill mills that fed so many people's addictions in North Carolina and around the nation."

    Shapiro added that the settlement will help states and localities to avoid legal challenges that could take years to resolve. "Litigating this across the country will be random, haphazard, and it will take decades" to bring the necessary resources to individuals most in need, he said.

    Ekow Yankah, a professor at Cardozo School of Law, said, "There are now thousands of cases, but this will set a precedent on pricing. This, to me, sets a baseline market rate for liability, and only the people who really want to gamble are the ones who will take the next phase to trial."

    But Yankah added that he is concerned money from the settlement could become general funding for states instead of funding specifically focused on address opioid misuse, like funds from the country-wide tobacco settlement in 1997. "It's a great moment for politicians to say, 'We're doing this to help people' ... but looking at the money from [the tobacco settlement], that money went to roads and bridges and general funds," Yankah said.

    Richard Ausness, a law professor at the University of Kentucky, expressed similar concerns about opioid settlement funds not reaching those most affected by the crisis. "The claims are for economic losses, not personal injury. They're not representing the interests of individual addicts, so the money may not actually get used for treatment," he said (Hellmann, The Hill, 10/21; Weixel, The Hill, 10/22; Hals, Reuters, 10/21; Gray, Reuters, 10/21).

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