Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

U.S. state officials urge support for landmark $26 billion opioid settlement

07/21/2021 | 08:42pm EDT
FILE PHOTO: The Johnson & Johnson logo is displayed on a screen on the floor of the NYSE in New York

(Reuters) -A group of state attorneys general unveiled on Wednesday a landmark $26 billion settlement with large drug companies for allegedly fueling the deadly nationwide opioid epidemic, but the deal still requires support from thousands of local governments.

Under the settlement proposal, the three largest U.S. drug distributors -- McKesson Corp, Cardinal Health Inc and AmerisourceBergen Corp -- are expected to pay a combined $21 billion, while drugmaker Johnson & Johnson would pay $5 billion.

The money is expected to be used on addiction treatment, family support, education and other social programs.

"There's not enough money in the world, frankly, to address the pain and suffering," said Connecticut Attorney General William Tong, but added that the money will "help where help is needed."

The deal represents the second-largest cash settlement ever, trailing only the $246 billion tobacco agreement in 1998. Attorneys general from 15 states were involved in negotiating the deal, as were lead lawyers for local governments.

McKesson will pay up to $7.9 billion, while AmerisourceBergen and Cardinal each agreed to provide up to $6.4 billion. The payments will be made over 18 years.

J&J will pay over nine years, with up to $3.7 billion paid during the first three years.

Around $2.2 billion of the total would cover attorneys fees and legal costs.

"This settlement will directly support state and local efforts to make meaningful progress in addressing the opioid crisis," said Michael Ullmann, Johnson & Johnson's general counsel.

To receive the full payout, the agreement needs support from at least 48 states, 98% of litigating local governments and 97% of the jurisdictions that have yet to sue.

The distributors were accused of lax controls that allowed massive amounts of addictive painkillers to be diverted into illegal channels, devastating communities, while J&J was accused of downplaying the addiction risk in its opioid marketing.

The companies have denied the allegations.

The settlement also calls for the creation of an independent clearinghouse to provide the distributors and state regulators aggregated data about drug shipments, which negotiators hope will help prevent abuse.

In a joint statement, the distributors called the settlement an important step "toward achieving broad resolution of governmental opioid claims and delivering meaningful relief to communities across the United States."

More than 3,000 lawsuits related to the health crisis, mostly by state and local governments, have been filed, and the settlement's ultimate payout depends on the number of localities that agree to drop their lawsuits.

Other settlements are also being negotiated, with the opioid makers Purdue Pharma and Mallinckrodt Plc working through the bankruptcy courts to secure support for settlements worth more than $10 billion and $1.6 billion, respectively.

States will have 30 days to evaluate Wednesday's agreement. North Carolina Attorney General Josh Stein said the expectation is "well north of 40 will sign on."

The opioid crisis has been blamed for hundreds of thousands of U.S. overdose deaths since 1999, but has hit some regions much harder than others, creating divisions among governments when it comes to considering the settlement.

"States that don't sign on are being irresponsible," said Louisiana Attorney General Jeff Landry. "We don't want perfect to be the enemy of the good."

Shares of the distributors each rose about 1.5%, while J&J, which also reported quarterly results on Wednesday, rose about 0.6%. Shares in the companies had climbed on Tuesday in anticipation of the announcement.

"NOT NEARLY GOOD ENOUGH"

Washington state's attorney general, Bob Ferguson, said he would not join the deal. "The settlement is, to be blunt, not nearly good enough for Washington," he said.

To receive the full payout, the agreement needs support from at least 48 states, 98% of litigating local governments and 97% of the jurisdictions that have yet to sue.

Electing to participate only guarantees a state some of the money. The settlement provides a base payout of up to $12.12 billion if all states agreed to the deal, and another $10.7 billion tied to localities joining the deal.

"Everyone has a common interest to get maximum participation to get a maximum amount of funds for abatement nationally," said Joe Rice, a lead lawyer for the local governments.

Once a state agrees to the deal, its local governments have up to 120 days to join. They can only join if a state does. Paul Geller, a lead negotiator for the plaintiffs, said if a state was unsure about joining, "the subdivisions ought to let the state know they want the money."

About half of the states, in anticipation of the settlement, have passed legislation or signed agreements with their localities governing how settlement money will be distributed, according to Christine Minhee, who runs an opioid litigation watchdog project supported by an Open Society Foundations Soros Justice Fellowship.

Legislation does not guarantee success. In Indiana, cities and counties representing more than half of the state's population have opted out after a law limited their cut to 15%.

Indiana Attorney General Todd Rokita's office said if those local governments do not opt back into the deal, the state could lose up to $237.9 million of the $507 million it would receive.

Communities in hard-hit West Virginia opted out of the deal after being offered less than 1% of the money, said Paul Farrell, a lawyer for West Virginia plaintiffs. Local governments in the state are pursuing a case that is on trial against distributors.

The settlement comes even as the crisis has shown no sign of letting up. The U.S. Centers for Disease Control and Prevention last week said provisional data showed that 2020 was a record year for overall drug overdose deaths, at 93,331, up 29% from a year earlier.

(Reporting by Nate Raymond in Boston; Additional reporting by Brendan Pierson and Tom Hals; Editing by Bill Berkrot and Leslie Adler)

By Nate Raymond


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ADLER GROUP S.A. -1.21% 18.77 Delayed Quote.-35.28%
MCKESSON CORPORATION -0.01% 207.75 Delayed Quote.19.45%
Latest news "Economy & Forex"
07:12aARGUS MEDIA : Kuwait launches new 100,000 b/d upstream facility
PU
06:22aPRIME MINISTER OF HUNGARY : Those who have been campaigning on the premise that the university has been shuttered have not been telling the truth
PU
06:21aGreek pm-mediterranean countries in front line of climate change
RE
06:21aGreek PM says climate crisis is with us and cost of ignoring it 'unimaginable'
RE
06:21aGreek pm-climate crisis is already here and we need policies affecting every aspect of economic and social life
RE
06:21aGreek pm mitsotakis says global cost of doing nothing on climate change is 'unimaginable'
RE
06:09aOPEC to stick to oil production deal in October, Iraq oil minister says
RE
06:08aUAE central bank sees COVID-19 increasing money-laundering risks
RE
06:02aMINISTRY OF EXTERNAL AFFAIRS OF REPUBLIC OF IN : External Affairs Minister's meeting with Foreign Minister of Kingdom of Saudi Arabia
PU
05:57aBA-owner IAG not planning to tap investors for funds - Sunday Times
RE
Latest news "Economy & Forex"