Drug companies reach opioids settlement ahead of landmark US trial

Paul Handley, Agence France-Presse

Posted at Oct 22 2019 07:48 AM

Drug companies reach opioids settlement ahead of landmark US trial 1
FILE PHOTO: Cataldo Ambulance medics Ricky Cormio (L) and Luke Magnant take a 40-year-old woman out of a grocery store where she was found unresponsive in the store's bathroom after overdosing on opioids in the Boston suburb of Malden, Massachusetts, U.S., November 15, 2017. After medics revived the woman with 10mg of naloxone on the floor of the bathroom, police found out she had been arrested in the past for charges including assault and battery. Brian Snyder, Reuters/file

CLEVELAND — Three leading American drug distributors and an Israeli drugmaker blamed for a deadly US opioid epidemic settled a bellwether civil lawsuit with 2 Ohio counties Monday, just hours before they were to go on trial, a federal judge announced.

The $260 million deal set the basis for a broader potential multi-billion dollar payout to some 2,700 addiction-ravaged communities nationwide that had signed on to the Cleveland lawsuit, the first in a federal court to address the causes of the crisis. 

Officials from Ohio's Summit and Cuyahoga counties -- which include the cities of Akron and Cleveland -- said they would be able to almost immediately begin boosting funds to address the massive fallout from the crisis.

The addiction epidemic has placed huge burdens on hospitals and emergency services, and on families supporting addicts and caring for children with addicted parents or parents who have died.

"Cuyahoga County has seen thousands of people die over the last several years. It's a tragedy. Summit County is no different," said Cuyahoga prosecutor Michael O'Malley.

"Our hearts go out to the families who have been touched by this," said Ilene Shapiro, the chief executive of Summit County.

"Whatever we can do to help these families rebuild and get as healthy as they can and move forward is what we are trying to do."


The settlement involved the 3 leading US drug distributors, some of the largest companies in the country -- Cardinal Health, AmerisourceBergen, and McKesson Corp.

It also included Israel's Teva, one of the world's largest generic drug manufacturers.

Pharmacy chain Walgreens opted out of the deal and will go to trial at a later date, said Federal District Judge Dan Polster. A small Ohio distributor also settled in a separate deal.

A trial would have examined allegations that the makers of the prescription painkillers and pharmaceutical distributors pushed billions of pills into communities without due care over 2 decades, making it excessively easy for patients to become addicted and creating a permanent demand.

The companies reaped tens of billions of dollars in profits while overdose deaths soared above 400,000 over 2 decades -- more than 70,000 in 2017 alone.

Plaintiffs had amassed large amounts of evidence showing that the companies knew they were fomenting an epidemic of addiction.

The deal, though, does not require the companies to admit wrongdoing.

"While the companies strongly dispute the allegations made by the two counties, they believe settling the bellwether trial is an important stepping stone to achieving a global resolution and delivering meaningful relief," the giant distributors said in a statement.

The prospects of more litigation sent the shares of the 3 distributors tumbling. AmerisourceBergen fell 3.4 percent, McKesson lost 3.2 percent, and Cardinal Health lost 2.2 percent.

Teva gained 8.8 percent on the relatively small cash payout it will make to the two countries, $20 million.

Walgreens meanwhile lost 1.5 percent as it planned to fight in court.


Talks continued with the broader group of plaintiffs for a settlement likely worth tens of billions of dollars in cash and in-kind payments, mainly free drugs for treating addiction.

Negotiations for a global deal worth a reported $48 billion -- but only $18 billion in cash -- broke down Friday amid differences between some states and smaller communities over the total value and how the money would be distributed.

Officials from 4 states who had backed the tentative deal on Friday called the 2-counties agreement "an important step," but said a global settlement could take weeks.

"The global resolution on the table will distribute funds fairly between states, counties and cities while also ensuring that these companies change their business practices to prevent a public health crisis like this from ever happening again," said the attorneys general of North Carolina, Tennessee, Pennsylvania and Texas.

Major drug manufacturers and distributors have already struck deals worth billions of dollars with states and local governments around the country to compensate them for the costs of the epidemic.
A study by the Society of Actuaries estimated that the opioid epidemic cost the US economy at least $631 billion from 2015 to 2018. 

In August, Purdue Pharma, the producer of OxyContin, one of the leading painkillers driving the addiction epidemic, reached a deal with 29 states and territories to compensate them. 

Purdue said the deal would cost it $10 billion and force it into bankruptcy, but critics in states and localities that opposed the deal say it is worth much less, and demanded the family that built Purdue, the Sacklers, pay billions more out of their own fortune.

In an Oklahoma trial in August, drug maker Johnson & Johnson was ordered to pay $572 million to compensate the state.

The company then reached a separate deal in the Cleveland case to pay the 2 counties $20.4 million.

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