Johnson & Johnson, McKesson, Cardinal, and AmerisourceBergen Agree To Colossal $26B Settlement In Opioid Epidemic Case

July 21, 2021

By Aara Ramesh

One of the largest civil suits in U.S. history took a turn towards resolution on Tuesday, July 21, when officials announced that a deal had been brokered in the 3,000 lawsuits filed by states, cities, counties, and other jurisdictions against the drug manufacturer Johnson & Johnson (J&J) and three distributors (McKesson, Cardinal Health, and AmerisourceBergen Corp.) over their alleged role in propagating the opioid abuse public health crisis.

The total settlement is for $26 billion. Through regulatory filings, it appears as though the three distributors will pay a total of $21 billion over 18 years, while J&J will pay $5 billion over nine years. Those who filed the suit alleged that millions of dollars have been spent on beefing up law enforcement, emergency personnel, and treatment centers as a result of the opioid epidemic. As such, the settlement money will be spent on the changes necessitated by the crisis, including on treatment, prevention, and public awareness raising. None of the money will directly go to those who lost loved ones to opioid overdoses, nor to the millions suffering addictions.

Over the last two decades, there have been half a million fatal overdoses across the U.S. from opioid abuse, beginning with OxyContin’s introduction in the late 1990s, progressing into heroin abuse, and now into illicit and often unwitting fentanyl consumption. Between 2006 and 2014, data suggests that over 100 billion hydrocodone and oxycodone pills were prescribed and distributed all over the country.

Despite the fact that the number of legal opioid prescriptions fell between 2012 and 2019 (to 153.2 million from 255.2 million), the opioid epidemic continues to claim lives. Last year alone, in a deadly collision between this public health crisis and the Covid-19 pandemic, the Centers for Disease Control and Prevention (CDC) estimates that almost 191 people died every day from opioid overdoses. The almost 70,000 deaths in 2020 is far above the 50,963 recorded in 2019.

J&J has been accused of using false and misleading marketing practices surrounding opioids. They also were a major supplier of raw materials for opioids to other companies, in addition to selling their own legal narcotics, neither of which the company does in the U.S. anymore.

The three other companies are some of the largest drug distributors in the country. Between them, the three companies account for around 90% of the market. Under federal law, they are responsible for ensuring that legal prescription drugs are not being illegally diverted, and are thus liable for “turning a blind eye” to suspiciously large shipments of opioids to specific areas. The deal also establishes a regulatory mechanism in which McKesson, Cardinal, and AmerisourceBergen will create and maintain a “clearinghouse,” to ensure that no one is seeking an outsized quantity of drugs.

Negotiations with the four companies have been ongoing for years now, with Tennessee, Texas, Pennsylvania, North Carolina, and Iowa being the driving forces behind the endeavor. Other states will have 30 days to decide whether to sign on or not; more than 40 of them are expected to do so. The remaining states are likely to reject the deal so they can move forward with the court cases that have already been set for trial.

The three distributors deny the accusations leveled against them, though they said they are hoping the settlement will enable them “to focus their attention and resources on the safe and secure delivery of medications and therapies.”

Meanwhile, J&J said, “The settlement is not an admission of liability or wrongdoing, and the Company will continue to defend against any litigation that the final agreement does not resolve.”

All four companies are facing other lawsuits across the country. The “big three” distributors are involved in an ongoing case in West Virginia, which is likely to conclude next week, and the outcome of which will not be affected by this $26 billion settlement as closing arguments have already been made there. Meanwhile, J&J, along with three other drug manufacturers, are being sued by several California counties, who are seeking damages and penalties of $50 billion for the costs they have incurred in fighting the epidemic.

On the other hand, the three distributors have been dropped from the ongoing case in New York. J&J agreed to a $263 million settlement in that case before proceedings began, and New York Attorney General Letitia James announced on Tuesday, July 20, that the other three companies will pay the state $1.1 billion. The case will continue against the six remaining defendants.

The other opioid-related court proceeding that is capturing nationwide attention is the bankruptcy proceedings of Purdue Pharma, the manufacturer of OxyContin, the drug widely believed to have birthed the opioid crisis, and its owners the Sackler family. The proposal suggests that the company would be turned into a public benefit company, whose profits would be used to mitigate the crisis. It also says that the Sacklers will relinquish control of the company and pay around $4.5 billion from their own pockets to be immunized against any future civil litigation, though they deny any wrongdoing in the opioid epidemic.

The deal gained ground earlier this month when a group of states including New York and Massachusetts dropped their opposition to the plan. Those still against it include a few states, the U.S. bankruptcy trustee, some Native American tribes, and individual victims. The main point of contention appears to be that the Sacklers are not being held accountable for their role. A hearing is scheduled for early August, when a judge will decide whether to accept the deal. Creditors are widely expected to approve the deal.

Litigation is also being pursued in Tennessee, Ohio, Texas, California, and Alaska against a variety of manufacturers, distributors, and pharmacy chains.