Drug companies head off opioid trial with $260m settlement

Drugmaker Teva and three distributors reached a settlement with two US counties over their alleged role in the opioid addiction crisis, just moments before the start a trial

Drugmaker Teva Pharmaceuticals and three distributors of opioid painkillers reached a settlement with two US counties over their alleged role in the opioid addiction crisis on Monday, just moments before the start of what would have been a bellwether trial.

However, the companies have so far failed to reach a broader agreement with the thousands of other US local authorities pursuing the companies.

Distributors Cardinal Health, McKesson, and AmerisourceBergen, as well as Teva, agreed a settlement worth $260 million with two Ohio counties, according to people familiar with the matter. The distributors said they will pay about $215 million of the total.

After last-minute talks, the deal headed off the first federal trial related to the opioid epidemic that was due to open in Cleveland on Monday.


“The proposed settlement will make significant progress to abate the epidemic by providing resources for and applying funds directly to necessary opioid-recovery programs,” said lawyers for the counties of Summit and Cuyahoga.

“Throughout this process, Summit and Cuyahoga Counties have tirelessly investigated, litigated, and prepared for the bellwether trial that would have begun today if not for this agreement. In doing so, the communities revealed facts about the roles of the opioid industry that created and fuelled the opioid epidemic.”

Shares in AmerisourceBergen and McKesson fell close to 4 per cent by the early afternoon in New York, while shares in Cardinal Health were down 2.5 per cent. Teva rose 3.6 per cent to $7.77.

The distributors said they “strongly dispute the allegations” but believe the settlement was a “stepping stone” to a global resolution of all the cases.

Mass litigation with over 2,700 plaintiffs - cities and counties from across the US - will continue, bringing claims, including public nuisance, conspiracy and racketeering, against the defendants involved in the production and distribution of opioids. The defendants deny responsibility for the crisis.

Opioid makers are also facing litigation from US states, as governments try to cover large healthcare and law enforcement balls resulting from the crisis. The Center for Disease Control has said 2 million Americans are suffering from opioid use disorder.

Four state attorneys-general involved in those talks - from North Carolina, Tennessee, Pennsylvania and Texas - said the Ohio counties’ deal was an “important step” towards a framework for a global settlement, which would distribute funds to combat the crisis and ensure companies change their business practices to prevent a similar public health crisis from happening again.

Monday’s court-steps deal comes after many of the original defendants settled in the weeks before the trial. Pharmaceutical companies Endo International settled both cases for $10m, Johnson & Johnson for $20m and Mallinckrodt for $30m.

But pharmacy chain Walgreens, part of Walgreens Boots Alliance, has not settled. The judge will now set a new schedule for its trial.

“Walgreens never manufactured prescription opioid medications. Walgreens never marketed or promoted opioid medications. Walgreens never prescribed any opioid medications. Walgreens was not a wholesaler of opioid medications,” a spokesperson for the chain said. “The only place Walgreens ever sold medications of any kind, including opioid medications, was at the pharmacy window when presented with a valid prescription written by a licensed physician for a legitimate medical need.”

- Copyright The Financial Times Limited 2019