Drugmaker Johnson & Johnson and three opioid distributors agreed to pay a combined amount $ 26 billion to resolve thousands of state and local government lawsuits over the handling of addictive pain relievers that have created a public health crisis in the United States.

The historic agreement – years in preparation – calls for McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. to pay nearly $ 21 billion to resolve the allegations, they turned a blind eye to suspicious opioid shipments, companies and state attorneys general said on Wednesday. J&J will pay $ 5 billion to settle allegations of illegal opioid marketing, which it stopped manufacturing last year.

The settlement marks a major milestone in the highly addictive drug litigation, which has been attributed to more than 500,000 deaths in two decades. States, cities and counties have filed nearly 4,000 lawsuits against more than a dozen drugmakers, distributors and pharmacies seeking compensation for billions spent fighting the opioid epidemic in the USA.

“While no amount of money is ever enough, this regulation will force these drug companies to pay a historic sum of money to provide much needed treatment and recovery services to communities in North Carolina and to change their business practices. so something like that doesn’t happen again, ”North Carolina Attorney General said Josh stein, which was part of the state negotiating group.

More than 40 states are expected to participate in the deal, Stein said at a press conference with other attorneys general. Early adopters already include California, New York, Ohio, Massachusetts, Virginia, Tennessee, Louisiana, Pennsylvania, Connecticut, Delaware and Virginia.

States that were not part of the negotiating group have 30 days to sign the agreement, and several have already announced that they will do so. They will then have 120 days to convince their local governments to accept money to drop their lawsuits, with bonuses paid by companies to get more for signing up. This process has already started in many states. New York Attorney General Letitia james said she expects the “vast majority” of communities in her state to register.

Resolve Liability

The companies have said they are confident the deal will solve a significant portion of their opioid responsibilities.

“These regulations will directly support state and local efforts to make meaningful progress in addressing the opioid crisis in the United States,” Michael ullmann, general counsel for J&J, said in an emailed statement.

AmerisourceBergen and Cardinal Health mentionned their share of the total will be $ 6.4 billion each, while McKesson’s share will be $ 7.9 billion. In a statement, they said the payments would be made over 18 years. J&J will pay $ 3.7 billion over the first three years and $ 1.3 billion over the next six years.

While shares of all four companies edged up, investors had long suspected an upcoming deal. The companies had disclosed the terms of their offer of $ 26 billion in securities deposits.

The settlement was announced on a day when New Brunswick and New Jersey-based J&J increased its profit and revenue guidance for the year, supported by the strong recovery in its pharmaceuticals, medical devices and of its consumer suits, and increased sales of its Covid-19 vaccine. Shares rose 0.4%.

“Today’s news is another positive development in opioid regulation for distributors,” Evercor ISI analysts, including Elizabeth Anderson, said in a research note to customers. “We see this settlement as likely to encompass almost all jurisdictions, with the final membership timeline also helping to provide resolution and remove equity overhang.”

‘Critical mass’

A “critical mass” of states must support the deal or it will collapse, Joe Rice, one of the attorneys representing the states, cities and counties, said at a press conference. He didn’t say how many states or local governments are needed to keep him alive.

Every day that goes without money for treatment only prolongs the pain of the opioid epidemic that has only worsened during the pandemic, Louisiana attorney general said Jeff Landry said at a press conference. “The states that don’t sign are really unreasonable. “

Washington State Attorney General Robert ferguson rejected the offer, saying what the four companies offered is too paltry to adequately address the damage they caused. For Washington’s 320 local governments, the state’s share would total more than $ 527 million, but it would only be $ 30 million per year for 18 years.

“The courts that have been tried against these companies have done much better than this deal,” Ferguson said in a statement, adding that a judge had set a January trial date for his trial against J&J.

In the only other verdict against an opioid maker, an Oklahoma judge in 2019 ordered J&J to pay $ 465 million for causing a public nuisance in the state with its illegal marketing of its painkillers. opioids. The Oklahoma Supreme Court assesses the company’s appeal.

U.S. District Judge Dan Polster, who oversees much of the opioid litigation, cited offers from J&J and distributors as an example for other companies trapped in painkiller lawsuits.

Pending complaints

Local governments have decided to prosecute opioid manufacturers, distributors and pharmacists, such as Walmart inc. – separately to avoid a repeat of what happened in the $ 246 billion settlement with tobacco companies in 1998. Much of that money ended up in state coffers and didn’t end up in state coffers. never made it to the city and county level.

While other opioid defendants have already settled, the deal involving J&J and the distributors is the first global resolution of all claims against a company by states, cities and counties. McKinsey & Co., for example, has a $ 641 million deal with all 50 states, but it does not cover municipal claims.

The deal also relieves litigation pressure on distributors, who were dropped as defendants in the opioid lawsuit from New York to Long Island. J&J already paid $ 263 million be withdrawn from this trial.

It is not known whether the settlement will also affect the status of the companies in an ongoing lawsuit in West Virginia federal court. Closing arguments are scheduled for next week. J&J is also currently facing a lawsuit in California state court for surrendering his old opioid pain relievers.

The consolidated case is In Re National Prescription Opioid Litigation, 17-md-2804, US District Court, Northern District of Ohio (Cleveland). The New York case is In Re Opioid Litigation, Index no. 40,000/2017, New York Supreme Court, Suffolk County.

(Updates with details of the terms of the agreement from the fifth paragraph)

–With the help of Riley griffin.

To contact journalists on this story:
Jef feeley in Wilmington, Delaware at [email protected];
Chris Dolmetsch in Manhattan Federal Court at [email protected]

To contact the editors responsible for this story:
Tina Davis at [email protected]

Steve stroth

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