States unveiled a historic $26 billion settlement with drug companies to resolve thousands of opioid-crisis lawsuits, paving the way for communities across the country to secure a jolt of funding to address an epidemic in painkiller addiction that hasn’t abated.
The nation’s three largest drug distributors—
Cardinal Health Inc.
have been negotiating the deal for more than two years, but Wednesday’s announcement signifies an important milestone that could clear the way for money to be received by states as soon as early next year.
States can’t use the money to fill general budget holes, as they did after a $206 billion deal with tobacco companies in the 1990s. Instead, the majority must be spent on social services to address the harms of opioid addiction, like treatment programs, education on how to dispose of pills and needles, and bolstered funds for first responders. One community may use it to help a large problem of addiction in the homeless population, while another may be more focused on opioid-addicted babies.
“It won’t be used to fill potholes, or build libraries, or balance budgets,” said
a plaintiffs’ lawyer representing several cities and counties involved in the deal.
Individuals and families who have been affected by opioid abuse won’t receive any money directly.
An opioid crisis that has claimed half a million lives in the U.S. has triggered more than 3,000 lawsuits filed by states, local governments, Native American tribes, hospital groups and others against players in the pharmaceutical industry. The lawsuits allege drugmakers pushed their painkillers for uses far beyond what was medically necessary and that distributors and pharmacies didn’t do enough to halt masses of pills from flowing into communities.
Drug addiction got worse during the pandemic, with opioid overdose deaths up about 37% in 2020 from the prior year, according to government data.
The companies pushed back, saying they made and distributed a medically necessary and federally regulated product. But at the same time, the burdens of litigation—like turning over millions of internal documents, making employees available for depositions, and preparing for complex trials that could air embarrassing details—has sent many of the companies to the negotiating table.
The attorneys general from Tennessee, North Carolina, Pennsylvania, New York, Louisiana, Delaware and Connecticut jointly announced the completed deal Wednesday, which had been rumored earlier this week.
“There’s not enough money in the world frankly to address the pain and the suffering and the tragedy of the families all of us know in our states,” Connecticut Attorney General
The broad terms call for the three distributors to pay up to $21 billion collectively over a period of 18 years, and for Johnson & Johnson to contribute $5 billion over nine years. The amounts could decrease if not enough states sign on, and the companies can still walk away if they decide the level of participation doesn’t buy them the global peace they are seeking to put the lawsuits behind them.
McKesson, AmerisourceBergen and Cardinal said in a joint statement that they dispute the allegations against them but believe the deal is an important step toward resolving the claims and “delivering meaningful relief to communities across the United States.”
Johnson & Johnson’s general counsel,
said, “We recognize the opioid crisis is a tremendously complex public health issue,” adding that the funds will help address the problem.
Shares for the four companies rose this week after news reports, including from The Wall Street Journal, that the settlement was expected to come this week. Analysts said the development was positive, although investors likely baked the settlement amount into stock prices since the amounts have been known, and noted that the wholesalers have reserved cash to make the payments.
However, some analysts said companies that didn’t reach settlements this week, such as Teva…