October 30, 2019

If you've been following the news lately, you likely saw big developments in ongoing litigation tied to the opioid epidemic. But tracking each new development and settlement can quickly become overwhelming—so Daily Briefing's Ashley Fuoco Antonelli has put together a roundup of the lawsuits, outlining everything you need to know about the settlements as well the questions they raise about how the settlement money should be spent.

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Understanding the lawsuits

Across the United States, various plaintiffs have filed thousands of lawsuits against pharmacies, drug manufacturers, drug distributors, and physicians for their alleged roles in fueling the opioid epidemic. Today, those cases largely fall into one of three categories:

  • A consolidation of more than 2,000 lawsuits filed against the pharmaceutical supply chain and individual physicians by counties, cities, Native American tribes, and individuals throughout the United States, which currently is referred to as the National Prescription Opiate Litigation, or MDL 2804;
  • A consolidation of cases brought by two Ohio counties against certain companies in the pharmaceutical supply chain, which we'll refer to as the "Ohio case"; and
  • Individual state lawsuits brought by 48 state attorneys general (AGs) against Purdue Pharma and other drug companies.

Notably, one judge—U.S. District Judge Dan Polster in Cleveland—is overseeing the two consolidated lawsuits, MDL 2804 and the Ohio case. Last month, the potential number of plaintiffs in the MDL case grew exponentially when Polster approved a plan to create the first-ever "negotiation class," which according to NPR's Colin Dwyer, allows a select group of cities and counties to negotiate settlements with the defendants on behalf of every city and county in the United States. Cities and counties have the option to opt out of the agreement.     

It's also worth noting that state AGs are not plaintiffs in the MDL or Ohio case—though a group of nearly 40 AGs has opposed Polster's plan to create a negotiation class, saying the move could weaken the AGs' bargaining power in state courts.

Understanding the settlements

So now let's talk about the various settlement headlines you've seen in recent weeks, and what those could mean for future negotiations.

Let's start with the Ohio case. The two Ohio counties have managed to strike settlement agreements with nearly every single defendant.

The settlements were reached with drug distributors, drugmakers, and other companies, and range in size from a $260 million deal with AmerisourceBergen, Cardinal Health, McKesson, and Teva Pharmaceuticals, to just over a $1 million settlement with the small drug distributor Henry Schein Medical. The settlements will be used to reimburse the counties for legal fees and other expenses related to the opioid epidemic, fund local nonprofits and foundations with opioid-related programs, and provide generic products to the counties, including medications used to treat opioid-related substance use disorders. Walgreens Boost Alliance is the only defendant in the Ohio case that has yet to settle, and Dwyer suspects the remaining claims against Walgreens will be combined other with pending lawsuits that the Ohio counties have brought against pharmacies.

The MDL case, meanwhile, is larger and more complicated.

First, let's explain what you've been hearing about Purdue Pharma, as that's the outlier here. Purdue was among the defendants in the MDL case and nearly every state-filed suit until the drugmaker filed for Chapter 11 bankruptcy last month. That bankruptcy filing was part of a $12 billion tentative agreement the drugmaker reached with nearly two dozen states and thousands of U.S. cities, counties, and territories to settle allegations against the company.

As NPR's Dwyer explains, the motion for bankruptcy temporarily froze all lawsuits filed against Purdue and shifted the case to bankruptcy court. However, the agreement, if finalized, would only settle claims against Purdue filed by the states, localities, and others who've agreed to the deal. According to Dwyer, about a dozen state AGs and hundreds of localities say the deal does not go far enough, and they are pushing for additional actions against Purdue and the Sackler family, which would give up ownership of the company under the agreement.

The remaining MDL defendants are still working with MDL plaintiffs and state AGs to reach a so-called global agreement, which the Los Angeles Times' Melissa Healy writes "would require the consent of the roughly 35,000 plaintiffs in the case as well as the 348 pharmaceutical companies, mom-and-pop drugstores, professional medical associations, and other assorted individuals" accused of fueling the opioid epidemic.

This week, AGs from four states proposed a framework that they say could serve as a global agreement, if other drug companies facing lawsuits and attorneys for the remaining local jurisdictions and 46 states with pending cases choose to join.

Currently, the $48 billion agreement would settle lawsuits filed by the AGs and localities in North Carolina, Pennsylvania, Tennessee, and Texas against five companies: AmerisourceBergen, Cardinal Health, Johnson & Johnson (J&J), McKesson, and Teva. Under the agreement, the companies would pay a total of $22 billion in cash and contribute a total of $26 billion worth of generic treatments for substance use disorders, product distributions, and data tracking measures.

While the agreement is being presented to other attorneys handling the state and local jurisdiction cases, Paul Farrell, a lead attorney representing local governments in the case, told NPR's Ailsa Chang that he's skeptical a final agreement will be reached because of disagreements over how the funds should be distributed.

"They've outlined how they believe the money should be distributed amongst the 50 states. And not surprisingly, Texas decided that they wanted the most amount of money. So when you break it down, my home state, West Virginia, which has disproportionately been impacted, was allocated 0.00015% of any overall settlement amount. And that's just a nonstarter," Farrell said.

Joe Rice, a lead attorney in the MDL case, told the LA Times' Healy that cash from any broad agreement likely would be divided between plaintiffs based on the volume of prescription opioids that were distributed in the areas, the number of people in the areas who died from opioid-related overdoses, and the number of people in the areas who have opioid-related substance use disorders.

That said, both attorneys suggested it's nearly impossible right now to calculate what percentage of cash settlements each state and locality might receive.

And some states, such as Oklahoma, actually have gone to trial on their own and won, though in Oklahoma's case against J&J, the final damages amount fell several billion dollars below what the state had sought. J&J also is in the process of appealing the ruling.

How states, localities could use the cash

One big question on public health experts' minds is how states and localities might seek to use any potential settlement cash.

For instance, some experts have raised concerns that states and localities might not use the money for services intended to address the opioid epidemic. Ekow Yankah, a professor at Cardozo School of Law, told The Hill's Nathaniel Weixel that he's 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.

Farrell said the outcome of the Tobacco Settlement is one reason why so many cities and counties decided to take their own action in the opioid debate. "I don't think that the communities that I represent are interested in replicating the tobacco settlement model, where the monies got sent to the state's [AG], and then those monies got sent to the general treasury. And then the legislatures used it to fill gaps in their budgets," Farrell said.

To address those concerns, former Mississippi AG Mike Moore (D), who helped to negotiate the tobacco settlement and is representing some plaintiffs in the opioid cases, told Healy that opioid settlements should specifically earmark the funds for services that would directly address the epidemic.

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