Top three drug distributors and one major drugmaker move closer to $ 26 billion deal with state and local governments that would end thousands of lawsuits over corporate role in opioid epidemic , according to people familiar with the negotiations and the company’s new filings. .
The deal is $ 4 billion more than an offer made a year ago, which was rejected by most states and municipalities. A major difference in the latest offering is $ 2 billion for private attorneys who represent cities, counties, and some states.
If the deal is finalized, four of the most prominent defendants in the nationwide litigation giant – McKesson, Cardinal Health, AmerisourceBergen and Johnson & Johnson – would no longer be threatened by future opioid lawsuits from those governments. Other drug manufacturers and national drugstore chains are still facing thousands of cases.
Most of the money in the settlement agreement is intended to help fund treatment and prevention programs in communities ravaged by drug addiction and overdose. From 1999 to 2018, 232,000 Americans died from prescription opioid overdoses, according to the latest figures from the Centers for Disease Control and Prevention. Addiction to painkillers has also triggered an epidemic of abuse of illegal opioids like heroin, contributing to an avalanche of deaths, crime and skyrocketing health care costs.
The pharmaceutical industry liability litigation has been fiercely fought, resulting in a handful of settlements and the filing of bankruptcy by some drugmakers, including Purdue Pharma, which has just reached a settlement of the criminal charges. and federal civilians.
The three distributors announced the broad outlines of their settlement offers in quarterly earnings reports published Tuesday and Thursday. Johnson & Johnson announced its share in a filing last month.
Distributors shipped more than three-quarters of the nation’s opioids to pharmacies, rarely raising red flags even when the quantities were grossly disproportionate to a store’s local population, according to federal data. In 10 years, for example, companies have shipped nearly 21 million prescription pain relievers to two pharmacies four blocks away in a West Virginia town of 2,900 people.
The latest deal is being negotiated in the shadow of two major trials tentatively scheduled for January, which the companies hope to avoid. Unlike last year’s more modest settlement offer, which was wickedly rejected by many states, but mostly lawyers negotiating for thousands of counties, cities and tribes, this offer is widely welcomed.
“The deal is making money for all communities in the United States that suffer from injury insults, first from the opioid epidemic and now with Covid as well,” said Paul J. Hanly , Jr., a lawyer who represents many small governments. , including two New York counties whose jury trial with New York State against these and other defendants is scheduled to begin in January.
Yet lawyers will have to sell the offers to the local governments they represent. “We believe it is in the best interest of these communities to start receiving a payment stream. We have looked at the finances of these companies and believe the numbers are now appropriate, ”said Hanly, who sits on an executive committee of negotiators.
Without this state and local agreement, companies could remain exposed to more opioid-related lawsuits indefinitely – and thus could forgo this agreement.
In the latest settlement offer, distributors agreed to step up their drug watch programs, which have been blasted in hundreds of lawsuits as contributing to the illegal sale of billions of pills.
According to the broad outlines of the plan outlined in this week’s filings, distributors will collectively pay about $ 21 billion over 18 years, with $ 8 billion paid for by McKesson alone.
Johnson & Johnson said it would contribute $ 5 billion, most of it in the first three years. Lawsuits against Johnson & Johnson said the company previously contracted with poppy growers in Tasmania and supplied 65% of the active ingredients of oxycodone sold in the United States. Its subsidiary, Janssen Pharmaceuticals, manufactured its own opioids, which have since been discontinued, and marketed them aggressively to doctors.
The money from the settlement would be used primarily for measures to alleviate the opioid crisis, including treatment programs, and to reimburse local and state governments for expenses related to the epidemic.
Attorneys general contacted for this article declined to comment as the proposal has yet to be finalized. Lawyers familiar with the talks said at least 45 states viewed the conditions positively.
New York has been described as a leader in the negotiations and a supporter of the deal. The excluded states are said to include New Mexico and Washington. Oklahoma is not fully participating as it has already won its case against Johnson & Johnson, although that verdict is under appeal.
But at least one obstacle to the deal suggests how difficult it is to reach consensus. Although the state of West Virginia established itself with distributors years ago, its counties and cities, which have their own lawsuits in federal court, have not. Indeed, a major bench lawsuit against distributors brought by the town of Huntington in West Virginia and neighboring Cabell County is scheduled to begin on January 4.
Senior counsel, Paul T. Farrell, Jr. did not accept the offer. “West Virginia fully supports the national settlement on behalf of all other states,” said Mr. Farrell, who represents many small governments in West Virginia. “It’s just not good enough for us.”
According to distributor performance reports, settlement of cases depends on a critical mass of plaintiffs signing up, although what constitutes an acceptable majority is unclear. It is said that the offer prompts states to sign as many local governments as possible. Without this broad buy-in, companies could remain exposed to more opioid-related lawsuits indefinitely – and therefore could walk away from this deal.
Over the course of nearly two years of talks, the most stubborn sticking points, aside from a net dollar figure, were about how to allocate funds to very different categories of plaintiffs – as well as squads of claimants. ‘private lawyers.
As part of the deal, each state would determine how it would distribute the settlement money. How much each state would receive would have to be determined by four factors: state population, overdose deaths, diagnoses of substance use disorders, and volume of tablets sold.
Reaching an agreement on compensation for lawyers was also a thorny issue. Cities and counties have relied on hundreds of private attorneys, who have worked on the litigation for years on a contingency basis and have already faced hundreds of millions of dollars in expenses.
Many states have also used outside advice to supplement their own staff.
Sometimes the same lawyers who represent local governments also worked for states. Local governments and states have often had contentious relationships during negotiations.
The $ 2 billion for lawyers is expected to be paid over seven years.
Characterizing the biggest difference between the deal proposed a year ago and the latter, one person familiar with the negotiations said: “There is more money for governments that have helped their citizens but a lot more money. for lawyers. “