The nation’s three largest drug distributors agreed to pay as much as $1.2 billion to New York state to settle a continuing trial accusing the companies of helping fuel widespread opioid addiction, as negotiators close in on a larger, national resolution of thousands of similar lawsuits.
Distributors McKesson Corp. , AmerisourceBergen Corp. and Cardinal Health Inc. have been on trial since late June alongside four other companies in a case brought by New York Attorney General Letitia James and the Long Island counties of Nassau and Suffolk. The distributors, while not household names, are among the nation’s highest-grossing companies and serve as middlemen for everything from prescription drugs to medical supplies.
“While no amount of money will ever compensate for the millions of addictions, the hundreds of thousands of deaths, or the countless communities decimated by opioids, this money will be vital in preventing any future devastation,” Ms. James said.
The New York deal was announced as negotiators complete the outlines of a $26 billion deal between states and the three distributors and Johnson & Johnson. That deal would open a path to ending more than four years of litigation over drug distributors’ and pharmaceutical companies’ liability for an opioid-addiction epidemic that federal data shows killed nearly half a million people in the U.S. from 1999 to 2019.
AmerisourceBergen, Cardinal and McKesson said jointly Tuesday that the New York settlement is an “important step” toward completing the broader deal. While they dispute the allegations against them at the trial, “they believe this resolution will allow the companies to focus their attention and resources on the safe and secure delivery of medications and therapies while delivering meaningful relief to affected communities,” the companies said.
Tuesday’s settlement with New York represents an acceleration of what the state would have received in the $26 billion deal.
Plaintiffs’ lawyers representing thousands of local governments and some states said Tuesday on a media call that negotiations continue around the clock to complete the terms of the national deal. The settlement would include money doled out over more than a decade, as well as the creation of a clearinghouse to help the distributors spot and halt suspicious drug orders.
“We’re hopeful 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’re dealing with the most complex constellation of cases that we’ve ever seen…We’re all agonizing over every sentence, every comma.”
A group of state attorneys general first announced the outlines of a settlement with the distributors and Johnson and Johnson in October 2019. Since then, lawyers have spent thousands of hours in meetings and phone calls to hash out the details of an agreement that could ultimately involve the majority of the nation’s states and local governments. For a period over the past year, the key lawyers involved met on Zoom every evening 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 Tuesday that, “Our negotiations are progressing well and potentially nearing their completion.”
Once the terms are codified, the deal sets in motion another delicate phase of the litigation. States can choose to sign on or reject the terms to keep pursuing their claims in court. States that agree to the terms then will have incentives to bring on board their local counties and cities, which were also plaintiffs.
The more states and localities that participate, the more of the $26 billion will get paid, the lawyers said Tuesday. The companies can still walk away if too many states and localities choose to go their own way.
Attorney fees and costs will take up $2.5 billion of the settlement funds, an amount plaintiffs’ attorney Joe Rice said Tuesday was a fair payout for lawyers that have invested a million and a half hours into the cases.
The four companies in the current deal aren’t the only ones being sued in the opioid litigation, but they are among the larger and most profitable targets of the suits. Settlement talks will next turn to companies such as AbbVie Inc.’s Allergan unit and Teva Pharmaceutical Ltd. , Mr. Rice said Tuesday. In 2019, Teva had publicly proposed contributing overdose-treatment drugs as its portion of a settlement, but Mr. Rice said that offer wasn’t attractive to their side.
A Teva spokeswoman said the company is actively negotiating and is still committed to its offer of donated medicines, which she said provides a holistic approach to helping solve the opioid epidemic. AbbVie representatives didn’t immediately respond to requests for comment.
National pharmacies that have been sued, Mr. Rice said, haven’t engaged in talks yet and plaintiffs’ lawyers are preparing for a pharmacy-specific trial scheduled for October.
New York’s trial was initially set to include drugmaker Johnson & Johnson and four national pharmacy chains. Those companies settled and avoided the uncertainty of a jury trial, with J&J agreeing to pay $263 million.
The money from distributors will be paid to New York state starting in two months and continue over the next 17 years, the state attorney general’s office said. The state said the majority of the funds will be directed toward New York communities that have been hit hard by the opioid epidemic.
The companies have largely denied the allegations in the opioid suits, arguing that they sold and distributed federally regulated products that serve a medical need. At the same time, some companies, such as J&J, have stopped selling opioids, and most of those being sued have acknowledged the public-health crisis and said they are working on ways to be part of a solution.
In New York, three lesser-known drugmakers and a smaller distributor haven’t settled and are still on trial in a proceeding that had initially been expected to last four months. Two other opioid trials being heard solely by judges are under way 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
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