Drug distributors and Johnson & Johnson reach $26 billion deal to end opioids lawsuits
After nearly two years of wrangling, the country’s three major drug distributors and a pharmaceutical giant have reached a $26 billion deal with states that would release some of the biggest companies in the industry from all legal liability in the opioid epidemic, a decadeslong public health crisis that has killed hundreds of thousands of Americans.
The agreement, announced Wednesday afternoon by a bipartisan group of state attorneys general, lays the framework for billions of dollars to begin flowing into communities across the country for addiction treatment, prevention services and other steep expenses from the epidemic.
The deal comes as the addiction crisis is worsening. Overdose deaths from opioids hit a record high in 2020, the Centers for Disease Control and Prevention reported earlier this month, a rise driven partly by the isolation and shutdown of services during the coronavirus pandemic. In all, more than 500,000 have died from overdoses to prescription and illegal street opioids since 1999, according to federal data.
“The urgency of the problem continues. It’s just relentless,” said Attorney General Herbert H. Slatery III of Tennessee at the news conference announcing the deal. Tennessee, whose own spike in opioid deaths was particularly sharp in 2020, could receive more than $500 million if the agreement is finalized.
The four companies that would be bound by the settlement — Johnson & Johnson and the drug distributors Cardinal Health, AmerisourceBergen and McKesson — are widely seen as having some of the deepest pockets among the corporate opioid defendants and this agreement was eagerly anticipated as a major pillar in the national litigation.
The distributors, which by law are supposed to monitor quantities of prescription drug shipments, have been accused of turning a blind eye for two decades while pharmacies across the country ordered millions of pills for their communities. Johnson & Johnson, which supplied opioid materials to other companies and made its own fentanyl patches for pain patients, is accused of downplaying the products’ addictive properties to doctors as well as patients.
In an emailed statement, Michael Ullmann, executive vice president and general counsel of Johnson & Johnson, said: “We recognize the opioid crisis is a tremendously complex public health issue, and we have deep sympathy for everyone affected. This settlement will directly support state and local efforts to make meaningful progress in addressing the opioid crisis in the United States.”
In a joint statement, the three distributors said: “While the companies strongly dispute the allegations made in these lawsuits, they believe the proposed settlement agreement and settlement process it establishes are important steps toward achieving broad resolution of governmental opioid claims and delivering meaningful relief to communities across the United States.”
A separate deal between the companies and Native American tribes is still being negotiated.
Wednesday’s agreement leaves thousands of other lawsuits still unresolved against many other pharmaceutical defendants, including manufacturers, drugstore chains and smaller distributors. Most of those companies are working on negotiating their own deals, which could potentially bring even more money to states, cities, counties and tribes. Purdue Pharma, the maker of OxyContin and its owners, members of the billionaire Sackler family, are negotiating a $4.5 billion settlement with plaintiffs as part of a bankruptcy restructuring.
Attorney General Josh Stein of North Carolina, whose state could get up to $750 million from the agreement with the distributors and Johnson & Johnson, said that the total so far that could be gained from the opioid litigation, when combining Wednesday’s deal with other potential settlements underway was almost $33 billion.
Under Wednesday’s agreement, the country’s three distributors would make payments totaling $21 billion over 18 years. Johnson & Johnson would pay $5 billion over nine years. A key feature of the agreement is that the distributors would establish an independent clearinghouse to track and report one another’s shipments, a new and unusual mechanism intended to make data transparent and send up red flags immediately when outsize orders are made.
In return, the states and cities would drop thousands of lawsuits against the companies and pledge not to bring any future action.
But there are daunting obstacles remaining before any checks are actually cut.
The agreement will now go out to the states and all their municipalities for formal approval. The states and the District of Columbia will have 30 days to review the offers and structure, including how much money they each would ultimately receive.