4 companies on verge of $26 billion settlement in US opioid lawsuits

NEW YORK -- The three largest drug distributors in the United States - McKesson, Cardinal Health and AmerisourceBergen - along with Johnson & Johnson are on the verge of a $26 billion settlement to resolve claims by state and local governments they helped fuel the nation's opioids epidemic.

It is expected to be the biggest single settlement in the complicated universe of litigation over the opioid epidemic in the U.S. It won't end the cases, but it would change them.

Lawyers said a full announcement could happen this week, but as a precursor to the bigger deal, New York reached an $1.1 billion agreement Tuesday with the distribution companies to settle an ongoing trial in the state.

It is largest monetary settlement ever negotiated by New York Attorney General Letitia James, and it resolves claims against the three companies for their role in helping to fuel the opioid epidemic. It also removes the three distributors from New York's ongoing opioid trial, currently underway in Suffolk County State Supreme Court.

"For more than two decades, the opioid epidemic has wreaked havoc on countless communities throughout New York and across the rest of the nation, killing hundreds of thousands of our friends and family members and addicting millions more," James said. "And over the course of these past two decades, McKesson, Cardinal Health, and Amerisource Bergen distributed these opioids without regard to the national crisis they were helping to fuel. But today, we're holding them accountable and delivering more than $1 billion more into New York communities ravaged by opioids for treatment, recovery, and prevention efforts, bringing the statewide total our office has negotiated in the last month alone to more than $1.6 billion. While no amount of money will ever compensate for the millions of addictions, the hundreds of thousands of deaths, or the countless communities decimated by opioids, this money will be vital in preventing any future devastation."

In March 2019, James filed the lawsuit to hold accountable the various manufacturers and distributors responsible for the opioid epidemic.

The manufacturers named in the complaint included Purdue Pharma and its affiliates, as well as members of the Sackler Family (owners of Purdue) and trusts they control; Janssen Pharmaceuticals and its affiliates (including its parent company Johnson & Johnson); Mallinckrodt LLC and its affiliates; Endo Health Solutions and its affiliates; Teva Pharmaceuticals USA, Inc. and its affiliates; and Allergan Finance, LLC and its affiliates.

The distributors named in the complaint were McKesson Corporation, Cardinal Health Inc., Amerisource Bergen Drug Corporation, and Rochester Drug Cooperative Inc.

The cases against Mallinckrodt and Rochester Drug Cooperative are now moving separately through U.S. Bankruptcy Court.

The case against Purdue and the Sacklers is also moving through U.S. Bankruptcy Court, but, earlier this month, James and a majority of states announced their approval of an agreement that would force the Sacklers and entities they control to pay more than $4.5 billion for opioid abatement, as well as shut down Purdue, and ban the Sacklers from ever selling opioids again.

The agreement is pending court approval.

Additionally, late last month, James announced an agreement with Johnson & Johnson that removed the company from New York's opioid trial in exchange for up to $230 million for the state's opioid prevention and treatment efforts, as well as it ending the sale of opioids nationwide.

The trial against the three remaining defendants -- Endo Health Solutions, Teva Pharmaceuticals USA, and Allergan Finance -- is currently underway and will continue in state court.

As part of the agreement, McKesson, Cardinal Health, and Amerisource Bergen will pay New York state a total of up to $1,179,251,066.68, of which more than $1 billion will go towards abatement.

Payments will start in just two months and will continue over the course of the next 17 years.

Joe Rice, another key lawyer in the national deal, said the announcement of the New York settlement was one key factor in the decision to make public some details of the planned national one now. But parties on the other side are not going that far yet.

Cardinal Health declined to comment early Tuesday, and the other distribution companies did not respond to requests for comment. But Johnson & Johnson reiterated in a statement that it's prepared to contribute up to $5 billion to the national settlement.

"There continues to be progress toward finalizing this agreement and we remain committed to providing certainty for involved parties and critical assistance for families and communities in need," the company said. "The settlement is not an admission of liability or wrongdoing, and the Company will continue to defend against any litigation that the final agreement does not resolve."

The distribution companies face thousands of similar legal claims from state and local governments across the country and have long been trying to settle them all. The New York deal would become a part of a national agreement if one can be struck this year.

The state and local governments say distribution companies did not have proper controls to flag or halt shipments to pharmacies that received outsized shares of powerful and addictive prescription painkillers. The companies have maintained that they were filling orders of legal drugs placed by doctors - so they shouldn't shoulder blame for the nation's addiction and overdose crisis.

An Associated Press analysis of federal distribution data found that enough prescription opioids were shipped in 2012 for every person in the U.S. to have a 20-day supply.

And opioids - including both prescription drugs and illegal ones like heroin and illicitly produced fentanyl - have been linked to more than 500,000 deaths in the U.S. since 2000.

Including the New York case, there are currently three trials across the U.S. of government entities' claims that companies should be held liable for the opioid crisis. One in California focuses solely on drugmakers, and one scheduled to wrap up this month in West Virginia aims only at distributors. That trial is expected to forge ahead because the settlement will not be finalized before closing arguments scheduled for next week.

Other cases are queued up to start. The only one of its kind to reach a verdict so far was two years ago in Oklahoma. There, a judge ordered Johnson & Johnson, the only company not to settle before that trial, to pay $465 million. The company is appealing the judgment.

The New York case is the broadest one to go to trial so far - and the first with a jury deciding the case rather than only a judge.

Johnson & Johnson settled for $230 million just before the case started. The remaining defendants are Teva Pharmaceutical Industries, Endo International and AbbVie, Inc.

With so many cases approaching trial, there's been a flurry of proposed or realized settlements over opioids. OxyContin maker Purdue Pharma declared bankruptcy as part of its effort to settle cases. It is proposing a reorganization that would use all future profits to fight the epidemic as part of a deal the company values at about $10 billion over time. That plan will face some opposition at a confirmation hearing in U.S. Bankruptcy Court next month.

(The Associated Press contributed to this report)
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