21 states reject opioid distributors’ settlement offer of $18 billion over 18 years
Twenty-one states are rejecting an $18-billion offer by McKesson Corp. and other opioid distributors to resolve nationwide litigation over their handling of the highly addictive painkillers, according to people familiar with the talks.
In a letter sent to lawyers for McKesson, Cardinal Health Inc. and AmerisourceBergen Corp. earlier this week, the states’ attorneys general said the distributors’ settlement offer is unacceptable “as currently structured.” The companies would pay the combined $18 billion over 18 years according to the deal’s current iteration. The one-paragraph letter’s first three signatures were from the attorneys general of Florida, Ohio and Connecticut.
A copy of the letter was read to Bloomberg News on Friday by the people, who asked not to be identified because they weren’t authorized to speak publicly about the talks. Settlement negotiations involving a group of attorneys general, the distributors and opioid makers have been ongoing for years.
“McKesson is focused on finalizing a global settlement structure that would serve as the best path forward to provide billions of dollars in immediate funding and relief to states and local communities,” David Matthews, a spokesman for the San Francisco-based company, said in a statement.
“We continue to work toward a nationwide settlement that would bring substantial and immediate relief to communities impacted by the opioid epidemic,” said Erica Lewis, spokeswoman for the Dublin, Ohio-based Cardinal Health.
“We were disappointed to hear that some states do not currently understand the merits of the global settlement framework that the distributors have been discussing with the attorneys’ general over the past many months,” Gabe Weissman, a spokesman for Chesterbrook, Pa.-based AmerisourceBergen, said in an emailed statement. “We remain committed to a fair negotiated resolution, but we are continuing to defend ourselves in litigation and actively prepare for upcoming trials.”
The distributors’ offer is part of a roughly $50-billion proposal to resolve more than 2,000 suits filed by state and local governments seeking to recoup billions in tax dollars they have spent addressing costs of the U.S. opioid epidemic.
As part of that offer, Johnson & Johnson — which at one time produced poppies, the raw ingredient in opioids — would pay $4 billion to resolve suits against it. Another opioid maker, Teva Pharmaceutical Industries Inc., would donate $23 billion worth of the generic addiction-fighting drug Suboxone and pay $250 million in cash over 10 years, to end litigation.
Drugmakers are accused of pushing opioid prescriptions on doctors across the U.S. and downplaying the risks of addiction, while distributors and pharmacies are accused of turning a blind eye to suspicious orders and failing to meet government-compliance requirements covering the painkillers.
More than 400,000 Americans have died of opioid overdoses over two decades as U.S. addiction rates surged, and local communities have sued to recover expenses on more drug treatment and police services.
The settlement proposal has helped share prices of distributors and some opioid makers rebound. Since Bloomberg reported Teva’s settlement proposal on Oct. 15, the Israeli company’s shares have nearly doubled.
While announcing that Teva reported slightly better-than-expected fourth quarter earnings, CEO Kare Schultz continued to be bullish on the prospects of a global opioid settlement. “We are still cautiously optimistic it can happen before the New York state trial, which is meant to start in March,” Schultz said.
Lawyers for New York Atty. Gen. Letitia James, along with private plaintiffs’ lawyers representing two New York counties, are slated to start presenting their cases against McKesson and the other distributors March 23 in Long Island.
Thousands of other suits have been consolidated before a federal judge in Cleveland for pre-trial information exchanges and test trials. The first case set to be tried on claims McKesson and other distributors ignored suspiciously large opioid orders to rack up profits settled in Cleveland in October for $260 million.
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