Global opioid lawsuits heading for $26B settlement
Connecticut Attorney General William Tong said it was the second-largest cash settlement in American history, behind the settlement with Big Tobacco two decades ago.
Attorneys general from several states, including New York and California, announced Wednesday a $26 billion proposed global settlement to resolve opioid lawsuits against four companies, including Johnson & Johnson.
The announcement comes two years after many of the same states first negotiated the proposed deal, which resolves the vast majority of more than 4,000 lawsuits against the three largest distributors of opiate pharmaceuticals: AmerisourceBergen Drug Corp., McKesson Corp. and Cardinal Health Inc. It also resolves claims against Johnson & Johnson’s Janssen Pharmaceuticals Inc.
Related: 15 states sign on to proposed $4.5B opioid settlement with Purdue Pharma, Sackler family
“This settlement that my colleagues and I are outlining today puts in place controls that go a long way to making sure this never happens again,” said Pennsylvania Attorney General Josh Shapiro, at a Zoom press conference Wednesday that also involved attorneys general from five states, including New York, Delaware and Connecticut. “Today’s action sends a message to drug distributors and pharmaceutical companies that we simply will not accept this type of behavior, and we are always here to fight like hell for the people we serve.”
Connecticut Attorney General William Tong said it was the second-largest cash settlement in American history, behind the settlement with Big Tobacco two decades ago.
“It’s a crisis that, apart from the COVID pandemic, we can all recognize as the worst public health crisis in America,” he said.
Lawyers in the multidistrict litigation in the U.S. District Court for the Northern District of Ohio, where most of the cities, counties and other governments have pending lawsuits, also agreed to the deal.
Initially pegged at $22 billion, the proposal jumped to $26 billion late last year after lawyers overcame an impasse involving attorney fees. Under the deal announced Wednesday, about $2 billion will go to attorney fees and costs.
Peter Mougey, of Levin, Papantonio, Rafferty, Proctor, Buchanan, O’Brien, Barr & Mougey in Pensacola, Florida, a member of the negotiating team in the multidistrict litigation, said lawyers invested more than $100 million into the litigation.
“It takes an army of lawyers to take on these nationwide companies,” he said at a separate Zoom conference Wednesday.
The settlement aims to get more states, cities and counties on board. Mougey acknowledged Wednesday the proposal was “dead on arrival” at the start of this year, but a set of “participation tiers” built into the new agreement gave defendants global peace and “helped break the logjam.”
“These tiers provide a certainty of payment to our clients that wasn’t there before,” he said.
The agreement depends heavily on the participation of states and their subdivisions, including those that still haven’t filed lawsuits.
Another negotiating team member, Joe Rice, of Motley Rice in Mt. Pleasant, South Carolina, on Wednesday outlined a timeline under which the agreement must reach what he called a “critical mass” of states, followed by a “critical mass” of local governments. That means the defendants could still back out, depending on whether the plaintiffs reach those benchmarks. If they do, the first payments could arrive by July 2022.
One way the deal intends to increase involvement is to provide incentive bonuses to states and local governments that participate the most.
States have 30 days to sign onto the deal, while local governments have 90 to 120 days. Many of the states have yet to pass legislation to create abatement funds specifically designed to receive the allocations from the settlement.
North Carolina Attorney General Josh Stein said “north of 40 states” were expected to participate in the settlement, including the 13 that led the negotiations. In addition to North Carolina, those were California, Colorado, Connecticut, Delaware, Florida, Georgia, Louisiana, Massachusetts, New York, Ohio, Pennsylvania, Tennessee and Texas.
Under the deal, the three distributors will pay up to $21 billion over a period of 18 years. AmerisourceBergen would pay $6.4 billion, Cardinal Health $6.4 billion, and McKesson $7.9 billion.
AmerisourceBergen said in a statement: “The years of legal actions leading up to this point have shown time and time again that pharmaceutical distributors must walk a legal and ethical tightrope between providing access to necessary medications and acting to prevent diversion of controlled substances. The settlement includes provisions that will increase clarity around state requirements regarding the distribution of opioid based medications. As we have for years, AmerisourceBergen will continue to advocate for greater clarity and regulatory guidance on the role of distributors in preventing the diversion of legal controlled substances.”
Johnson & Johnson will provide $5 billion within nine years, including $3.7 billion during the first three years.
“We recognize the opioid crisis is a tremendously complex public health issue, and we have deep sympathy for everyone affected,” said Michael Ullmann, general counsel of Johnson & Johnson. “This settlement will directly support state and local efforts to make meaningful progress in addressing the opioid crisis in the United States.”
Johnson & Johnson also agreed to stop selling opioids for 10 years, and the distributors will share their data with an independent monitor and flag or halt suspicious orders to local pharmacies.
Some states and cities were quick to announce their share of the proposed agreement Tuesday, which would distribute payments over 18 years. New York Attorney General Letitia James, who participated in Wednesday’s conference, announced a $1.1 billion settlement with the three distributors amid a trial that began a month ago. That trial will continue against three other companies that are not part of the settlement, which comes in addition to a $263 million settlement that Johnson & Johnson previously reached.
On Tuesday, Los Angeles City Attorney Mike Feuer said his office was in negotiations with the Attorney General’s Office in California, which is set to receive $2.34 billion if all the local governments participate. He anticipated the city of Los Angeles would get tens of millions of dollars.
The deal excludes the state of West Virginia and Native American tribes, as well as manufacturers other than Johnson & Johnson and several pharmacies, including CVS and Rite Aid.
Read more: