After two years of wrangling, the nation’s three major drug distributors and a pharmaceutical giant have struck a $26 billion deal with states that would free some of the industry’s biggest companies from all legal liability in the opioid epidemic.
The announcement was made Wednesday afternoon by a bipartisan group of state attorneys general.
The proposal will now go to every state and municipality in the country for approval. If enough of them formally sign it, billions of dollars could be released from companies to help communities pay for addiction treatment and prevention services and other financial costs of the pandemic.
In return, states and cities would drop thousands of lawsuits against companies and pledge not to take any future action.
The settlement binds only these four companies — drug distributors Cardinal Health, Amerisource Bergen McKesson, and Johnson & Johnson — leaving thousands of other lawsuits against manufacturers and drugstore chains, including many other pharmaceutical defendants, still unresolved in huge nationwide litigation.
But these four companies are widely seen as the defendants with the deepest pockets.
In an emailed statement, Michael Ullman, executive vice president and general counsel for Johnson & Johnson, said: “We recognize that the opioid crisis is a very complex public health issue, and we extend our deepest sympathies to all affected. The agreement will directly support state and local efforts to make meaningful progress in addressing the opioid crisis in the United States.
Distributors did not immediately respond to requests for comment.
Distributors, who are supposed to oversee shipment volumes of drugs prescribed by law, have been accused of turning a blind eye for two decades, while pharmacies across the country have ordered millions of pills for their communities. The plaintiffs also allege that Johnson & Johnson, which contracted with opium producers in Tasmania to supply opioid ingredients to manufacturers and to make its own fentanyl patches for pain patients, could not help doctors as well as patients. Used to reduce addictive properties.
From 1999 to 2019, prescription and street opioid overdoses caused 500,000 deaths, according to federal statistics. The Centers for Disease Control and Prevention said earlier this month that opioid deaths hit a record high in 2020.
Under the agreement, three distributors in the country will pay over 18 years. Johnson & Johnson will pay $5 billion over nine years. A key feature of the agreement is that distributors will set up an independent clearinghouse to track and report each other’s shipments, a new and unusual mechanism that aims to make data transparent and immediately dispatch red flags when large orders are placed.
A separate deal between the companies and Native American tribes is still being negotiated.
The settlement was presented by the attorney generals of North Carolina, Pennsylvania, New York, Delaware, Louisiana, Tennessee and Connecticut.
Wednesday’s announcement shows that a key element — a vast majority of states agreeing in principle — has been accomplished. But tough odds remain before any checks can actually be deducted.
The states and the District of Columbia will now have 30 days to review the agreement closely, including how much each will be paid over 17 years. Many states are yet to get a chance to investigate the deal. And while many allow their attorney general to sign, others require that legislators be consulted. An unspecified number of states would have to sign for the deal to go ahead. If that limit is not met, companies can walk away.
While the states are making decisions, a trial brought by several California counties in state court against Johnson & Johnson and a local West Virginia trial in federal court against the distributors will continue.
States will also have to start quarantining their areas, including those who have already registered cases and those who have not agreed to the deal. The greater the number of signatory local governments, the greater the amount each state will receive.
One law, Elizabeth Burch, said, “lawyers will force their clients, localities to agree to settlements, because if the deal doesn’t happen, the lawyers won’t get paid.” Professor at the University of Georgia who has followed the lawsuit closely.