States Seek $26.4 Billion From Drug Companies in Opioid Litigation
August 18 2020 - 5:59AM
Dow Jones News
By Sara Randazzo
States are asking for around $26.4 billion from major
pharmaceutical industry players to help pay for damage wrought by
the opioid crisis, people familiar with the matter said, the latest
demand in yearslong litigation seeking to hold companies
accountable for widespread drug addiction.
The current talks involve McKesson Corp., AmerisourceBergen
Corp. and Cardinal Health Inc., which collectively distribute the
majority of pharmaceutical drugs in the country, as well as Johnson
& Johnson, which makes some opioid painkillers, the people
said.
More than 3,000 states, local governments and Native American
tribes have sued companies up and down the pharmaceutical supply
chain, blaming them for contributing to an influx of opioids into
their communities.
The distributors in particular have come under scrutiny for
allegedly failing to flag suspicious orders that were diverted for
improper uses. The companies have denied the allegations in the
lawsuits, though some have reached settlements with the Justice
Department in recent decades over faulty order-monitoring
programs.
One case so far has gone to trial, resulting in a $465 million
verdict against Johnson & Johnson in Oklahoma. Others have
resulted in smaller settlements, but the majority of the cases are
unresolved. The litigation drove one company, OxyContin maker
Purdue Pharma LP, into bankruptcy, and shareholders have looked for
the remaining defendants to reach deals to cap their liability.
Meanwhile, many communities continue to grapple with opioid
overdoses and have faced challenges during the coronavirus pandemic
to treat those who are addicted.
Settlement discussions with the four companies have been under
way for a year but stalled during the onset of the pandemic. The
delay of a major trial slated to take place in March in New York
eliminated what was expected to be a pressure point on settlement
talks.
A new round of trial dates, including ones in October in Ohio
and West Virginia, are once again ramping up a sense of urgency to
resolve the cases, those involved in the talks say.
Around a dozen attorneys general, including those from Florida,
Delaware and North Carolina, made their latest settlement demand on
a Monday call with the drug companies, the people familiar with the
request said. The ask includes a collective $21.14 billion from
McKesson, AmerisourceBergen and Cardinal, and $5.28 billion from
Johnson & Johnson, one of the people said. The majority of the
money would be slated for abating the crisis, with $2.42 billion
going to fees and expenses, the person said.
Johnson & Johnson reiterated a prior statement that the
company is working toward a resolution that will "provide certainty
for involved parties and critical assistance for families and
communities in need."
Cardinal, AmerisourceBergen and McKesson declined to
comment.
Attorney fees have been one sticking point in resolving the
cases, and the current proposal includes money for both private
lawyers that have been hired by states and local municipalities, as
well as money to reimburse states that staffed their own cases, the
people said.
At least 400,000 people have died in the U.S. from overdoses of
legal and illegal opioids since 1999, according to federal data.
The lawsuits are seeking to recoup costs borne by communities such
as burdens on emergency services, medical care and foster services
for children born to addicted parents.
Settlement discussions last October centered around the three
distributors paying $18 billion over 18 years, and Johnson &
Johnson contributing $4 billion. Those talks were spearheaded by
Tennessee, North Carolina, Texas and Pennsylvania, but many states
wanted more money from the companies.
As some states and lawyers focus on settlement talks, others
continue to pursue lawsuits. Alaska recently sought court
permission to update its complaint to name McKesson's former
chairman and several members of its board of directors. Using
emails and internal documents turned over by McKesson as part of
the sprawling litigation, Alaska alleges the board members failed
to improve McKesson's compliance programs in the wake of a 2008
settlement with federal prosecutors that found McKesson allowed
controlled substances to flow to pharmacies that sold drugs online
to customers without legal prescriptions.
Another drugmaker involved in earlier settlement proposals, Teva
Pharmaceutical Industries, wasn't involved in Monday's call, the
people familiar with the discussions said. Teva Chief Executive
Kare Schultz said earlier this month he had pinned his hopes on a
deal going through before the New York trial in March but that
talks continue. "Unless we have that time pressure, it probably
won't get finalized," he said in an interview with The Wall Street
Journal.
--Jared S. Hopkins contributed to this article.
Write to Sara Randazzo at sara.randazzo@wsj.com
(END) Dow Jones Newswires
August 18, 2020 05:44 ET (09:44 GMT)
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