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By Sara Randazzo and Jared S. Hopkins
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 18, 2019).
Drug companies and state and local governments are racing to cut a deal in landmark opioid litigation, with talks set to continue this week before a federal judge that could settle more than 2,500 lawsuits for tens of billions of dollars.
U.S. District Judge Dan Polster asked chief executives from top drug companies to meet with lawyers for states, cities and counties in his Cleveland court on Friday morning, according to people familiar with the matter. Judge Polster is overseeing cases filed by cities and counties and has pushed all sides to reach a comprehensive settlement.
The companies -- distributors McKesson Corp., Cardinal Health Inc., AmerisourceBergen Corp. and drugmaker Teva Pharmaceutical Industries Ltd. -- are among the defendants in a trial slated to start in Judge Polster's courtroom Monday. The case, expected to serve as a bellwether for the broader litigation, involves two Ohio counties that are among hundreds of plaintiffs trying to hold the pharmaceutical industry accountable for widespread opioid addiction.
Another major drugmaker, Johnson & Johnson, is also involved in the broader settlement discussions but earlier reached a $20 million deal to avoid the Ohio trial. Another defendant at the trial, Walgreens Boots Alliance Inc., will have representatives in Friday's settlement talks but not the chief executive, a person familiar with the matter said.
Representatives for McKesson, AmerisourceBergen, Cardinal and Teva declined to comment Thursday.
Some state attorneys general value the current settlement proposal at as much as $50 billion, people familiar with the matter said. That would include $18 billion in cash over 18 years from the three major distributors -- McKesson, Cardinal and AmerisourceBergen -- and an additional $4 billion from Johnson & Johnson, The Wall Street Journal has reported.
Over a period of time, Teva would contribute drugs and distribution services valued at as much as $29 billion, the people said, adding that some states have expressed skepticism about the value of Teva's portion of the deal.
Lawsuits against drugmakers and distributors began piling up in 2017, brought by state and local governments seeking to recoup the costs of addressing opioid addiction, including pressure on emergency services and foster-care systems.
One of the major early targets in the cases, Purdue Pharma LP, the maker of OxyContin, filed for bankruptcy last month to try to implement a deal it has valued at between $10 billion and $12 billion to resolve the 2,600 lawsuits it faces. Two dozen states still oppose that deal, which includes at least $3 billion from members of the Sackler family -- the company's owners -- saying it doesn't hold Purdue sufficiently accountable.
Reaching a truly comprehensive resolution has proved challenging for the drug companies because of the many plaintiffs' competing agendas. In addition to 2,500 lawsuits filed by cities, counties, hospitals and Native American tribes in federal court, virtually every state attorney general has filed their own lawsuit in state courts.
Attorneys general in Tennessee, Texas, North Carolina and Pennsylvania are leading the current round of talks, causing tension with some other states that feel cut out of the process. Some plaintiffs' lawyers representing cities and counties don't support the deal currently under discussion, a person familiar with the matter said.
Ohio Attorney General Dave Yost sent a letter to the four attorneys general on Thursday, expressing concerns with the current settlement proposal and laying out the terms under which he could back it, according to a copy of the letter viewed by the Journal.
The letter says that "the lack of consultation with other attorneys general regarding terms of a possible settlement increases the risk of a result similar to what we saw in the Purdue/Sackler negotiations, where fully half of the states are not in agreement." Outside of bankruptcy court, such dissension would create an unworkable settlement, he wrote.
To win his support, Mr. Yost wrote, a deal would need to ensure that money is spent "abating and remediating the addiction epidemic" and that private plaintiffs' lawyers representing some of the government entities don't get an undue windfall. Mr. Yost also noted that Ohio, unlike many states, has sued the drug distributors, adding that any agreement that treats the litigating states "the same as those who have sat on the sidelines watching while others carried the battle is unfair and inappropriate," he wrote.
Meantime, preparations continue to race along for Monday's trial. Twelve jurors were chosen Wednesday and Thursday, and lawyers continue to ready for opening statements. It isn't clear what any settlement with Teva and the drug distributors would mean for a sixth defendant, Henry Schein, a small distributor.
Write to Sara Randazzo at email@example.com and Jared S. Hopkins at firstname.lastname@example.org
(END) Dow Jones Newswires
October 18, 2019 02:47 ET (06:47 GMT)
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