Drug Giants Close In on a $50 Billion Settlement of Opioid Cases - The New York Times 17/10/19 6(58

Drug Giants Close In on a $50

Billion Settlement of Opioid Cases
The nation’s three largest drug distributors, as well as two
HEALTH

manufacturers, are in intense negotiations to settle thousands

of cases before a trial set to begin on Monday.
By Jan Hoffman

Oct. 16, 2019

CLEVELAND — The nation’s three largest drug distributors and two manufacturers have
agreed with multiple states on a framework to resolve thousands of opioid cases with a
settlement worth nearly $50 billion in cash and addiction treatments, according to three
people familiar with the negotiations.

The agreement would release AmerisourceBergen, Cardinal Health and McKesson

Corporation, which together distribute about 90 percent of the country’s medicines, along with
Johnson & Johnson and Teva, the Israel-based manufacturer of generic drugs, from a rapidly
growing list of more than 2,300 lawsuits that they face in federal and state courts.

Although the states have agreed in principle to the framework, cities and counties across the
country have not yet fully embraced it, said lawyers for a committee that represents
thousands of municipal governments. They are seeking more information about how the
money will be distributed, whether it will be directed to relief measures or end up in general
funds for state legislatures, and “when they could expect the financial support to start,” the
lawyers said in a statement.

All the parties are under extreme pressure to reach a deal by Monday, when opening
statements are set to begin in Cleveland in the first federal trial to determine responsibility for
the opioid epidemic, which has led to 400,000 deaths in the United States over the past two
decades.

Some of the largest drugmakers, pharmacy chains and distributors have been fighting with
state and local governments in the courts for nearly two years, as the nation searches for
accountability for one of the worst public health crises in America’s history.

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Drug Giants Close In on a $50 Billion Settlement of Opioid Cases - The New York Times 17/10/19 6(58

The three drug distributors and Teva are defendants in the first trial, brought by two Ohio
counties. With thousands of similar governmental lawsuits on the national runway, the Ohio
suit is considered an important showcase that will test the strength of both sides’ witnesses
and legal arguments before 12 jurors.

The drug distributors are not nearly as well known as some of the other corporate players
implicated in the opioid crisis, like Purdue Pharma, whose misleading marketing of the drug
OxyContin is thought to have set off the epidemic. But the distributors are bigger and richer
than the manufacturers — all three are among the top 20 companies in the United States by
revenue — and numerous lawsuits have pointed to evidence that they routinely evaded
regulators and helped pharmacies and manufacturers circumvent limits on orders of opioid
painkillers.

Lawyers for the plaintiffs in the trial starting Monday have said that the distributors conspired
through their trade organization to flout the federal law, which obliged them to monitor sales
and report outliers. They said that the distributors not only cast a blind eye on extraordinary
orders, but lashed and rewarded their teams to sell greater volumes of opioids.

In New York State alone, the distributors sold 1.6 billion oxycodone pills to pharmacies
between 2010 and 2018. It was distributors, said the office of Attorney General Letitia James of
New York, who “jammed open the floodgates.”

The companies either did not respond to messages or declined to comment. The distributors
have said they were simply delivering medication that was approved by the Food and Drug
Administration and prescribed by doctors.

Pennsylvania, North Carolina, Tennessee and Texas are leading the settlement talks for the
states, along with lawyers for thousands of cities and counties whose cases are in federal
court.

According to people familiar with the talks, the combined value of the deal breaks down as
follows: $20 billion to $25 billion in cash to be divided among the states and localities to help
pay for health care, law enforcement and other costs associated with the epidemic; and
another $25 billion to $30 billion in addiction-treatment drugs, supplies and delivery services.

Many details are still being debated, including the timetable for when the money would be
paid, people familiar with the negotiations said. Some state and local governments wanted
more details about how the companies calculated the total dollar figures on services and
addiction-treatment drugs.

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Drug Giants Close In on a $50 Billion Settlement of Opioid Cases - The New York Times 17/10/19 6(58

Whether the amount will be considered sufficient by all the plaintiffs remains to be seen. A
new report by the Society of Actuaries projects that the costs related to the opioid epidemic —
including health care, child and family assistance programs, criminal justice activities and lost
wages — will hit $188 billion in 2019 alone.

“It’s not an accident these offers are coming out on the eve of trial,” said Abbe R. Gluck, a
professor of health policy and law at Yale Law School. “But I think the question will be if this
number is going to be enough to get a sufficient number of local governments to sign on.”

People familiar with the talks said that one sticking point in the negotiations is how much
money will go toward attorneys’ fees for the private lawyers who represent governments in
the overwhelming majority of cases and work on contingency.

Those lawyers filed the first opioid lawsuits in 2014 and have since conducted hundreds of
depositions and compiled many millions of documents.

This proposed deal is considerably larger than the tentative settlement negotiated by Purdue
Pharma earlier this fall, not least because it involves five large companies instead of one.
Under the Purdue agreement, Purdue’s owners, members of the Sackler family, would pay
between $3 billion and $4.5 billion over seven years. The company would be restructured into
a public corporation, with profits from drug sales going toward the plaintiffs. Purdue has also
agreed to donate addiction-treatment medication.

The Purdue deal is being vigorously opposed by about two dozen states who contend that the
Sacklers are not paying enough money and have not yet fully disclosed how much they have
earned from OxyContin sales.

Johnson & Johnson recently settled with the two Ohio counties for about $20.4 million, but the
company is named in many of the other suits, as well.

Many drug manufacturers and pharmacy chains also have been named as defendants in
federal and state opioids cases, but they are apparently not involved in these negotiations.

On Wednesday, even as negotiations continued, jury selection was underway in the federal
courthouse in Cleveland. Because the trial is expected to be heavily steeped in testimony
about illegal drug use, addiction, crime and rehab, prospective jurors were interviewed in
private in Judge Dan A. Polster’s chambers, so that lawyers could determine whether they
had a glancing acquaintance with any of those topics.

The atmosphere in the courtroom was solemn and portentous, with lawyers proceeding
exactly as if the trial will indeed begin on Monday, should talks collapse.

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Drug Giants Close In on a $50 Billion Settlement of Opioid Cases - The New York Times 17/10/19 6(58

Jan Hoffman writes about behavioral health and health law. Her wide-ranging subjects
include opioids, vaping, tribes and adolescents. @JanHoffmanNYT

A version of this article appears in print on Oct. 17, 2019, Section A, Page 1 of the New York edition with the headline: Drug Giants Nearing Settlement Of Opioid
Cases for $50 Billion

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