Three of the country’s top drug distributors and a drug manufacturer announced an eleventh hour settlement on Monday to avert a landmark federal trial, marking a significant development in the legal fight over accountability for the nation’s opioid epidemic.
The $260 million settlement with two Ohio counties would net only a fraction of what the counties were seeking, but legal experts said it could set the bar for other settlements in the future.
According to plaintiffs’ attorneys, the three distributors will pay a combined $215 million immediately. Teva will pay $20 million cash between the end of this year and 2021 and provide $25 million worth of the anti-overdose drug Suboxone.
“There are now thousands of cases, but this will set a precedent on pricing,” said Ekow Yankah, a professor at Cardozo School of Law. “This, to me, sets a baseline market rate for liability, and only the people who really want to gamble are the ones who will take the next phase to trial.”
Hours later, the same companies, along with Johnson & Johnson, announced they had agreed in principle to a $48 billion global settlement with North Carolina, Pennsylvania, Tennessee and Texas.
The global settlement has been offered to attorneys general and attorneys representing jurisdictions in 46 other states, which are expected to join in the coming days. Each state and its counties will receive a share of the $22 billion in cash based on a formula that is being finalized as more states sign on to the agreement.
But there are concerns about the settlement.
Yankah said he is worried the settlement could wind up as just a general slush fund for states, similar to what happened with the tobacco settlement in 1997.
“It’s a great moment for politicians to say, ‘We’re doing this to help people’ ... but looking at the money from [the tobacco settlement], that money went to roads and bridges and general funds,” Yankah said.
Richard Ausness, a law professor at the University of Kentucky, said he is concerned the money may not make it to the people most affected.
“The claims are for economic losses, not personal injury,” Ausness said. “They’re not representing the interests of individual addicts, so the money may not actually get used for treatment.”
While none of the settlements include admission of liability, attorneys for the states and counties said the money will help bring resources to areas in need.
“This agreement is an important step in our progress to help restore people’s lives,” said North Carolina Attorney General Josh Stein (D). “Not only will it provide significant funds and treatment drugs to help people get healthy, it will go a long way in preventing the pill mills that fed so many people’s addictions in North Carolina and around the nation,” Stein added.
Pennsylvania Attorney General Josh Shapiro (D) noted that nearly $18 billion of the settlement would be paid in cash over the next three years.
“Litigating this across the country will be random, haphazard, and it will take decades” to get the necessary resources to those most in need, Shapiro said. He added that making sure much of the settlement money was paid quickly will prevent it from being lost if the companies declare bankruptcy.
But plaintiffs are keeping up the pressure on companies that have not settled.
Cuyahoga and Summit counties had asked for nearly $8 billion. Attorneys and county officials said the settlement will provide immediate relief, but there will be more litigation.
“The proposed settlement will make significant progress to abate the epidemic by providing resources for and applying funds directly to necessary opioid-recovery programs,” the plaintiffs’ attorneys said in a joint statement Monday.
In a statement, Walgreens vigorously defended itself.
“Walgreens is completely unlike the wholesalers involved in the national opioid litigation. Before 2014, Walgreens delivered opioid medications – among many other types of medications – only to our own pharmacies, staffed by our own pharmacy professionals. We never sold opioid medications to pain clinics, internet pharmacies or the ‘pill mills’ that fueled the national opioid crisis,” the company said in a statement to The Hill.
The lawsuits from counties, Pennsylvania Attorney General Josh Shapiro, cities and Native American tribes are seeking financial compensation for consequences of the opioid epidemic that has claimed more than 200,000 lives since 1999.
Five companies had already reached agreements with Cuyahoga and Summit counties in recent weeks, including Johnson & Johnson and Mallinckrodt Pharmaceuticals, which is the largest manufacturer of generic opioids.
Cases across the country allege the industry pushed opioid painkillers for widespread use without adequately warning of the risks of addictions.