October 17, 2019

Major US drug distributors, manufacturers look to settle opioid cases for $50B

Daily Briefing

    Three of the largest U.S. drug distributors and two manufacturers have reportedly reached an agreement to collectively pay nearly $50 billion in cash and addiction treatments to settle a consolidated case of thousands of lawsuits claiming the companies helped fuel the opioid epidemic, according to individuals familiar with the deal.

    Struggling to confront the opioid epidemic? Start here.

    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 an Ohio case—which is scheduled to go to trial Monday—that observers have said could serve as a "bellwether" for the consolidated case.

    Drugmakers also face separate lawsuits brought by state attorneys general (AGs).

    Purdue Pharma, which is not involved in this latest deal, and its owners, the Sackler family, last month filed for Chapter 11 bankruptcy as part of a tentative agreement totaling up to $12 billion that the drugmaker reached with nearly two dozen states and thousands of U.S. cities, counties, and territories to settle allegations against the company in the consolidated case. However, some state officials are opposing the tentative settlement because they believe the owners of Purdue should pay more under the deal.

    Drug distributors seek settlement

    The proposed agreement would resolve thousands of lawsuits pending in federal and state courts against AmerisourceBergen, Cardinal Health, and McKesson, as well as Johnson & Johnson and Teva Pharmaceuticals. The parties hope to finalize the deal before the Ohio trial begins Monday. The three drug distributors and Teva are all defendants in the Ohio case. Johnson & Johnson previously reached an agreement to settle charges brought against it in the Ohio case.

    Sources familiar with the deal told Bloomberg that under the settlement, Teva would contribute over $15 billion worth of generic drugs, including those that help combat opioid overdoses, over 10 years. Sources also said Johnson & Johnson under the deal would pay $4 billion to settle all claims against the company in the consolidated suit.

    Sources previously had said the three drug distributors under the proposed settlement would pay a collective total of $18 billion over 18 years. The proposed settlement also could include the donation of substance use disorder treatments.

    The proposed settlement would need to be approved by the plaintiffs' lawyers and government entities, which each have different interests. Lawyers representing the cities and counties are asking for more information on how the funds will be distributed before agreeing to the settlement. The settlement, if approved, would be the first to broadly resolve the lawsuits without involving bankruptcy.

    AmerisourceBergen and Cardinal declined to comment on the proposed settlement, the Wall Street Journal reports. McKesson did not respond to requests for comment, according to the Journal (Randazzo, Wall Street Journal, 10/15; Owens, "Vitals," Axios, 10/16; Bengaluru/Raymond, Reuters, 10/15; Johnson, The Hill, 10/15; Feeley/Griffin, Bloomberg, 10/15; Hoffman, New York Times, 10/16; Reuters/New York Times, 10/16).

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