With a $26 billion nationwide settlement in sight over claims that the three largest U.S. drug distributors and Johnson & Johnson helped fuel a nationwide opioid epidemic, state and local governments will soon turn their attention to pharmacies and a handful of drugmakers.
Reuters reports that U.S. state attorneys general are expected to unveil a settlement proposal this week with distributors McKesson Corp (MCK.N), Cardinal Health Inc (CAH.N) and AmerisourceBergen Corp (ABC.N) contributing a combined $21 billion, while Johnson & Johnson would pay $5 billion.
Noticeably absent from the potential $26 billion deal are pharmacy operators including Walgreens Boots Alliance, Walmart Inc , Rite Aid Corp and CVS Health Corp, which have been accused of ignoring red flags that opioid drugs were being diverted into illegal channels.
The deal also would not include drugmakers AbbVie Inc, Teva Pharmaceutical Industries Ltd or Endo International Plc, which have been accused of misleadingly marketing their pain medicines as safe.
The pharmacies and drugmakers have denied the claims, saying rising opioid prescriptions were driven by doctors, that they followed federal law and that the known risks were included in U.S.-approved labels for the drugs.
News of the proposed nationwide settlement came three weeks into a jury trial in New York, and legal experts said upcoming court proceedings will pressure the remaining defendants to reach a deal.
The drugmakers are currently defending themselves at the New York trial and a trial in Orange County, California, and are expected to face another trial in San Francisco along with the pharmacies later this year. The pharmacies, which settled the New York case shortly before trial, also face an October trial in Ohio.
After start of the Orange County case earlier this year, Allergan defense counsel Donna Welch, in her opening statements in front of Judge Wilson, initially threw co-defendants in the opioid litigation “The Pharmacy Chains” under the bus, claiming they were the responsible party in unleashing hundreds of millions of prescription opioids, the “firewall” in mitigating the now defense asserted, non-existent opioid crisis. This illustration of the “blame others” defense strategy has fewer targets as supply chain participants settle cases, removing opportunities for remaining defendants to shift blame.
Richard Ausness, a law professor at the University of Kentucky, said a settlement this week reduces the groups of defendants in the litigation and makes it harder for the remaining companies to blame others.
Endo is scheduled to go to trial next week to assess damages over a lawsuit brought on behalf of Tennessee counties and an infant allegedly born addicted to opioids, in which a judge has already ruled the company liable. District Attorney General Barry Staubus of Tennessee’s Sullivan County told WHLJ television that the company offered to settle, but the deal would be limited to that case.
Peter Mougey, a lawyer representing the local governments pursuing opioid litigation around the country, said at a news conference to discuss proposed settlements that he was “frustrated” pharmacies were not part of the nationwide deal.
“They’ve had ample time to assess where they are with their liability, and we all have the common goal of trying to end this opioid epidemic,” he said.
The pharmacies did not immediately respond to requests for comment.