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$260 Million Opioid Settlement Reached at Last Minute With Big Drug Companies $260 Million Opioid Settlement Reached at Last Minute With Big Drug Companies
(about 5 hours later)
CLEVELAND — The three major drug distributors and an opioid manufacturer have reached a settlement worth $260 million to avoid the landmark first federal opioid trial that was set to begin here Monday. CLEVELAND — The three major drug distributors and an opioid manufacturer have reached a $260 million settlement with two Ohio counties to avoid the landmark first federal opioid trial that was set to begin here Monday.
Judge Dan A. Polster of the Northern District of Ohio announced from the bench Monday morning that the deal was struck around 1 a.m. The deal, which is a combination of cash payouts and donations of addiction treatments, could become a model for a nationwide settlement of thousands of similar cases in state and federal courts.
People familiar with the discussions said a settlement to resolve thousands of other cases brought by local governments and states could be announced later in the day by state attorneys general, but Judge Polster confirmed only the settlement of this first landmark trial. Judge Dan A. Polster of the Northern District of Ohio announced from the bench Monday morning that the deal was struck around 1 a.m.
To settle the case, the drug distributors — McKesson, Cardinal Health and AmerisourceBergen — will pay $215 million to the two Ohio counties that brought the case, people familiar with the agreement said. Teva, the Israel-based manufacturer of generic drugs, is expected to pay $20 million in cash and donate $25 million worth of addiction treatment drugs. In the settlement, the drug distributors — McKesson, Cardinal Health and AmerisourceBergen, which distribute about 90 percent of all the medicines to pharmacies, hospitals and clinics in the United States — agreed to pay $215 million to the two Ohio counties that brought the lawsuit. Teva, the Israel-based manufacturer of generic drugs, agreed to pay $20 million in cash over three years and donate $25 million worth of addiction treatment drugs such as a generic Suboxone, which blunts cravings for opioids.
The settlement is the latest in a flurry of agreements reached by drug companies to avoid the landmark federal trial, which was to serve as a test case for legal arguments and evidence in a yearslong attempt to hold the pharmaceutical industry accountable for an epidemic of addiction to opioid painkillers that has killed hundreds of thousands of Americans. “We hope it provides a benchmark for a national resolution for other communities to have the resources to do what is necessary to abate the epidemic,” said Peter H. Weinberger, a Cleveland lawyer who represents some Ohio counties.
Other companies who already reached a settlement to avoid that trial include Johnson & Johnson; Mallinckrodt Pharmaceuticals, one of the biggest manufacturers of generic opioids; and Purdue Pharma, which has been widely blamed for igniting the opioids crisis with misleading marketing of its drug OxyContin. Even as the two-county settlement was being announced, the drug distributors and other corporate defendants in the trial were pursuing a global deal, worth $48 billion in cash and donated addiction treatments, to resolve all opioid lawsuits against them. Those talks, with lawyers for cities and counties and the state attorneys general, had reached an impasse on Friday, but people familiar with the negotiations said that they had restarted and an announcement of progress toward a deal could come as soon as Monday afternoon.
The ultimate goal of all companies is to reach a so-called global settlement to resolve all the cases still on the runway in federal and state courts. Purdue reached a tentative settlement to do just that in September — a deal that involves a cash payment of up to $4.5 billion from its owners, members of the Sackler family, and a restructuring of the company into a public entity that would donate all profits to cities, counties and states to compensate for costs associated with the epidemic. But that deal is mired in a long bankruptcy court process. In announcing the settlement of the trial from the bench, Judge Polster appeared to nudge the parties to keep working on a global settlement. “I did not encourage the settlement of this trial only,” he said, adding that he hoped that “we don’t lose the momentum that was created.”
On Monday morning, the drug distributors, Teva and other companies were still working to reach a global deal worth nearly $50 billion in cash and donated addiction treatments. Talks to do so had reached an impasse on Friday but people familiar with the negotiations said on Monday that they were continuing. The lawsuits from the two Ohio counties are among more than 2,300 cases that Judge Polster is overseeing. Monday’s settlement is the latest in a flurry of deals reached by drug companies to avoid that landmark federal trial, which was to serve as a test case for legal arguments and evidence in a yearslong attempt to hold the pharmaceutical industry accountable for an epidemic of addiction to opioid painkillers that has killed hundreds of thousands of Americans.
In announcing the settlement of the Ohio trial in court on Monday morning, Judge Polster appeared to nudge the parties to keep working. “I did not encourage the settlement of this trial only,” he said, noting that the parties and negotiators were in the courthouse all day Friday and into the evening to discuss the larger settlement. Other companies that already reached a settlement to avoid the opening trial include Johnson & Johnson; Mallinckrodt Pharmaceuticals, one of the biggest manufacturers of generic opioids; and Purdue Pharma, which has been widely blamed for igniting the opioids crisis with misleading marketing of its drug OxyContin.
He said he understood that the parties will keep trying, adding that he hoped that “we don’t lose the momentum that was created.” The ultimate goal of all companies is to reach a so-called global settlement to resolve the cases still on the runway in federal and state courts. Purdue reached a tentative settlement to do just that in September — a deal that involves a cash payment of up to $4.5 billion from its owners, members of the Sackler family, and a restructuring of the company into a public entity that would donate all profits to cities, counties and states to compensate for costs associated with the epidemic. But that deal is mired in a long bankruptcy court process.
This developing story will be updated. With today’s agreements, the combined total so far for the two Ohio counties alone — Cuyahoga, which includes Cleveland, and Summit, which includes Akron — comes to roughly $320 million. Cuyahoga will receive 62 percent of the money, and Summit will receive 38 percent. Recently, executives from both counties announced plans to abate the local crisis, and the money has already begun to be distributed.
In a joint statement, the three distributors, which are among the richest companies in the United States, disputed the counties’ allegations that the companies had delivered highly suspicious quantities of opioids without reporting them to authorities.
The distributors added that they expect “settlement funds to be used in support of initiatives to combat the opioid epidemic, including treatment, rehabilitation, mental health and other important efforts.”
Ilene Shapiro, the Summit County executive said in a statement: “These settlement agreements give us the ability to help people now.”
Walgreens, the giant pharmacy chain, was also a defendant in this trial, and is the only company that has not settled. It had been sued as a distributor that supplied opioids to its own pharmacies. Now Walgreens will face a separate trial that would focus on its role as a dispenser, Judge Polster announced on Monday morning.
“We never prescribed any opioid medication, and never sold opioid medications to pain clinics, internet pharmacies or the ‘pill mills’ that fueled the national opioid crisis,” Phil Caruso, a spokesman for Walgreens, said in a statement. “Our pharmacists have always been committed to serving patients in the communities where they live and work.”
The big pharmacy chains, including Rite Aid, CVS and Walmart, generally have undergone less scrutiny so far than the drug manufacturers and distributors. That may soon change. “We have powerful evidence that pharmacies were also implicated in this epidemic,” said Paul J. Hanly Jr, a lead lawyer for the local governments. “Those folks now have targets on their backs. Even so, we’re very interested in a global settlement, and we believe those companies are too — or they ought to be. ”
There are many more pharmaceutical industry defendants who were not in the first trial, including generic drug manufacturers, smaller drug distributors, and the other big pharmacy chains. But lawyers expressed hopes that Monday’s settlement could push other defendants to settle their cases as well, even on a broader, comprehensive basis.
One signature dispute between the state attorneys general and plaintiffs for cities, counties and tribes is about how settlement money will be disbursed and who will control the purse strings. One of the biggest criticisms of the Big Tobacco settlement some 20 years ago, which was brokered in large measure by state attorneys general, was that most of the money wound up in legislative funds to balance budgets and even fix pot holes. That is why local governments involved in the opioid litigation want to ensure they have better access to settlement money.
People close to the talks said that a model being discussed was to apportion the money into three buckets: one for the states, a second for the cities and counties, and the third and largest for a general opioid remediation fund for grants, supervised by a monitor who would possibly be appointed by the court.
On Monday morning, when expectations were high that a trial would indeed begin, a line to get into the courthouse began forming before 7 a.m. Many people said they were fans of the plaintiffs’ trial lawyer, Mark Lanier — known for his dramatic, even impish opening statements, replete with slides and props — and hoped to see his performance.
In the scrum following Judge Polster’s announcement that the trial would not go forward, Mr. Lanier was offering samples of the opening argument he would not be able to give, a thundering indictment of the opioid industry that he had spent months preparing. The warm-up alone included a 3,000-year-old Sumerian poppy jar; a first edition of Thomas De Quincey’s “Confessions of an English Opium-Eater”; and a reading from “The Wonderful Wizard of Oz.” (As Dorothy falls asleep in the poppy fields: “If we leave her here she will die,” said the Lion. “The smell of the flowers is killing us all.”)
A defense lawyer walking by overheard him, gave an eye roll and said: “You ought to hear my opening. I throw glitter.”