By Sara Randazzo
CLEVELAND -- A $260 million late-night settlement between four
drug companies and two Ohio counties averted a trial here over who
is to blame for the opioid crisis, clearing the way for broader
talks aimed at resolving thousands of opioid-addiction cases
nationwide.
Lawyers for the plaintiffs and companies said the settlement
could be an important step toward a multibillion-dollar deal that
brings closure to 2,500 lawsuits and sends needed money to
communities hard-hit by opioid addiction. Municipalities have
balked at a comprehensive settlement negotiated by state attorneys
general that includes $22 billion in cash and up to $26 billion in
donated addiction-treatment drugs and services, saying that it
isn't enough money and that they want some control over how it is
spent.
For now, Monday's deal will direct $215 million to Ohio's
Cuyahoga and Summit counties from the country's top drug
distributors: McKesson Corp., Cardinal Health Inc. and
AmerisourceBergen Corp. The counties -- which encompass the
Cleveland and Akron metro areas -- will also receive $20 million in
cash and the donation of $25 million in addiction-treatment drugs
from Israel-based drug manufacturer Teva Pharmaceutical Industries
Ltd.
A fifth defendant, Walgreens Boots Alliance, didn't reach a
deal. The trial against it was postponed.
The trial, had it gone forward, would have been the first time
documents would be presented and witnesses questioned in open court
about how drug distributors allegedly contributed to the opioid
crisis. Lawyers negotiated over the phone until nearly 1 a.m.
Monday to reach the settlements, even as trial attorneys were
putting the finishing touches on opening statements. U.S. District
Judge Dan Polster got a call around midnight alerting him the trial
might not happen.
Lawyers will now attempt to bridge the deep differences not only
between the plaintiffs and defendants, but among the hundreds of
states, counties, cities and Native American tribes bringing
suits.
The municipalities say they want to avoid the outcome of the
1990s tobacco litigation, in which a $206 billion settlement went
to the states and was often spent to fill budget holes.
Representatives for the cities and counties say any broader
settlement should immediately go toward helping alleviate the
impacts of opioid addiction, which was a feature of Monday's Ohio
deal.
"We are going to utilize these funds to get people on the right
path," said Cuyahoga County prosecutor Michael O'Malley, called his
county a "poster child" for opioid addiction.
The opioid lawsuits have become a major liability for companies
up and down the pharmaceutical supply chain.
The lawsuits broadly allege that drug manufacturers pushed
opioid painkillers for widespread use without adequately warning of
the risks of addiction and that distributors allowed high volumes
of pills to flood into communities and be diverted for improper
use. At least 400,000 people have died in the U.S. from overdoses
of legal and illegal opioids since 1999, according to federal
data.
One of the opioid litigation's largest initial targets,
OxyContin maker Purdue Pharma LP, filed for bankruptcy in September
and is trying to implement a global deal with states and
communities it values at between $10 billion and $12 billion. An
earlier trial, in Oklahoma, ended with a $572 million verdict
against the lone defendant, Johnson & Johnson, though a judge
has said he plans to reduce it by at least $100 million because of
a mathematical error.
The two Ohio counties's cases had been selected to go to trial
first from more than 2,300 federal-court opioid lawsuits that are
consolidated before Judge Polster.
The three drug distributors, which serve as middlemen that ship
drug orders placed by pharmacies and hospitals, have argued that
they complied with federal regulations and that they must balance
their mission to deliver medicine against efforts to prevent and
detect illegal diversion of those drugs.
In a joint statement, they said that while they disputed the
allegations against them, settling with the trial counties "is an
important stepping stone to achieving a global resolution and
delivering meaningful relief." Teva said separately that it is
"pleased to positively contribute to solving the nationwide opioid
epidemic."
Walgreens distanced itself from the other defendants, saying it
never manufactured, marketed or wholesaled prescription opioid
medications, or sold any opioid medicines to pain clinics, internet
pharmacies or "pill mills." Walgreens, widely known as a pharmacy,
had been included in the trial for its role as a drug distributor
to its own stores.
Paying just the two counties helped the companies avoid
potentially embarrassing internal documents and details from coming
to light but left thousands more cases unresolved.
"This is not a pause, this is not a time to catch our breath,"
said Paul Geller, a Florida lawyer representing local and state
governments in opioid cases. Monday's settlement, he said, "does
not in any way, shape or form slow down our efforts to reach a
global resolution that makes sense."
Monday's settlement, lawyers involved say, can't be directly
extrapolated into what a larger deal might look like, since the
pressure of an imminent trial often leads to larger payouts.
McKesson, Cardinal Health and AmerisourceBergen shares all
traded down on Monday. According to investment bank R.W. Baird,
investors are concerned that there is still uncertainty about an
ultimate payment in a broad settlement.
A group of state attorneys general have advocated a deal that
includes $18 billion to be paid over 18 years from
AmerisourceBergen, Cardinal and McKesson; $4 billion from Johnson
& Johnson over a shorter time frame; and the donation of drugs
from Teva valued at $23 billion plus $250 million in cash.
But the local governments say the money doesn't come fast enough
to help them address the ramifications of the opioid crisis and
that too much of the funds would be controlled at the state
level.
"It's got to be fair. It's got to be now," Joe Rice, one of the
lead plaintiffs' lawyers in the federal cases, said of what it'll
take to reach a global deal.
The attorneys general of Texas, North Carolina, Tennessee and
Pennsylvania, who have been leading talks, said Monday they are
working on a resolution that ensures companies change their
business practices and is "distributed fairly across states,
cities, and counties and used wisely to combat the crisis."
Texas plaintiffs lawyer Mark Lanier expressed disappointment
outside of court Monday that a jury wouldn't hear the narrative he
had crafted for the counties' opening statements.
He planned to open, he said, by walking jurors through the
history of opioid addiction dating into the early 1800s. He planned
to show a first-edition copy of L. Frank Baum's "The Wonderful
Wizard of Oz" from 1900, which includes a scene of the heroine
Dorothy falling asleep in a field of poppies, overcome by the
poison the flowers contain.
He then would have detailed for the jurors the regulatory
landscape the drug companies face and allegations against the five
companies, including an internal email from one defendant that Mr.
Lanier said cavalierly stated, with a misspelling, that "the DEA
can suk it," referring to the Drug Enforcement Administration.
A preacher as well as a lawyer, Mr. Lanier said he spent Sunday
giving a sermon and teaching at his church in Houston, celebrating
his 59th birthday at his mom's house, then flying to Cleveland to
finish preparing. Well before the settlement was reached, he said,
"I was ready to go."
(END) Dow Jones Newswires
October 21, 2019 16:10 ET (20:10 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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