New York hits $ 1.2 billion settlement between drug distributors over opioid epidemic

The country’s three largest drug distributors have agreed to pay New York State up to $ 1.2 billion to settle an ongoing lawsuit accusing the companies of helping fuel widespread opioid addiction, as negotiators move closer to a broader national resolution of thousands of similar lawsuits.

McKesson Distributors Corp.

, AmerisourceBergen Corp.

and Cardinal Santé Inc.

have been on trial since late June alongside four other companies in a case brought by New York Attorney General Letitia James and Long Island counties of Nassau and Suffolk. Distributors, although not known, are among the most profitable businesses in the country and serve as intermediaries for everything from prescription drugs to medical supplies.

“While no amount of money will ever make up for the millions of addictions, the hundreds of thousands of deaths or the countless communities decimated by opioids, that money will be vital to preventing any future devastation,” said Ms. James.

The New York deal was announced as negotiators finalized the outlines of a $ 26 billion deal between the states and the three distributors and Johnson & Johnson.

The deal would pave the way for an end to more than four years of litigation over the liability of drug distributors and drug companies for an epidemic of opioid addiction that federal data has shown has killed nearly half a million people. people in the United States from 1999 to 2019.

AmerisourceBergen, Cardinal and McKesson jointly said Tuesday that the New York settlement is an “important step” towards reaching the broader agreement. Although they dispute the allegations made against them in the lawsuit, “they believe this resolution will allow companies to focus their attention and resources on the safe and secure delivery of drugs and therapies while providing significant relief to affected communities. “the companies said.

Tuesday’s settlement with New York represents an acceleration of what the state would have received under the $ 26 billion deal.

Lawyers for the plaintiffs representing thousands of local governments and some states said in a media appeal on Tuesday that negotiations were continuing around the clock to reach the terms of the national deal. The settlement would include money distributed over more than a decade, as well as the creation of a clearinghouse to help distributors spot and stop orders for suspicious drugs.

“We hope we’re in the very, very final stages,” said Paul Geller, a Florida lawyer who represents several cities and counties and has helped lead the talks. “We are dealing with the most complex constellation of cases we have ever seen… We are all distressed by every sentence, every comma. ”

A group of state attorneys general first announced the contours of a settlement with distributors and Johnson and Johnson in October 2019. Since then, lawyers have spent thousands of hours in meetings and on phone calls to clarify the details of an agreement that could ultimately involve the majority of states and local governments across the nation. For a period over the past year, the main lawyers involved have met on Zoom every night at 8 p.m., including holidays, Mr Geller said.

A bipartisan group of 10 state attorneys general, including those from Ohio, North Carolina and Massachusetts, said on Tuesday that “Our negotiations are progressing well and are potentially on the verge of an end.”

Once the terms are codified, the agreement sets in motion another delicate phase of the litigation. States can choose to sign or reject the conditions to continue to assert their claims in court. States that agree to the terms will then have incentives to involve their local counties and cities, which were also complainants.

The more states and communities that participate, the more the $ 26 billion will be paid, lawyers said Tuesday. Businesses can always back out if too many states and communities choose to go their own way.

The attorney’s fees and expenses will represent $ 2.5 billion of the settlement funds, an amount that plaintiffs attorney Joe Rice said on Tuesday was a fair payment for attorneys who invested 1.5 million dollars. hours in business.

The four companies in the current deal are not the only ones facing opioid litigation, but they are among the most important and profitable targets of the lawsuits. Settlement talks will then turn to companies like AbbVie Inc.

Allergan and Teva Pharmaceutical Unit Ltd.

Rice said Tuesday. In 2019, Teva publicly offered to provide overdose medication as part of a settlement, but Rice said the offer was unattractive to them.

A spokeswoman for Teva said the company is actively negotiating and remains committed to its donated drug offering, which it says provides a holistic approach to help resolve the opioid epidemic. Representatives for AbbVie did not immediately respond to requests for comment.

The national pharmacies that have been sued, Rice said, have yet to engage in talks and the plaintiffs’ attorneys are preparing for a pharmacy-specific lawsuit slated for October.

The New York trial was originally scheduled to include drugmaker Johnson & Johnson and four national drugstore chains. These companies have settled in and avoided the uncertainty of a jury trial, with J&J agreeing to pay $ 263 million.

The cash from the distributors will flow to New York State starting at two months and will continue for the next 17 years, the state attorney general’s office said. The state said the majority of funds would be directed to communities in New York City that have been hit hard by the opioid epidemic.

The companies have largely denied the allegations in the opioid lawsuits, saying they sell and distribute federally regulated products that meet a medical need. At the same time, some companies, such as J&J, have stopped selling opioids, and most of those sued have acknowledged the public health crisis and said they are working on ways to be part of a solution.

In New York City, three lesser-known drugmakers and a smaller distributor have yet to settle and are still on trial in proceedings that were originally scheduled to last four months. Two more opioid lawsuits heard only by judges are pending elsewhere in the country: one in West Virginia federal court against the three drug distributors and another against four drugmakers in California state court .

The opioid crisis

More WSJ coverage on the devastating effects of addiction, selected by editors

Write to Sara Randazzo at [email protected]

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