Opioid maker Johnson & Johnson and three drug distributors are expected to disclose this week the final terms of a $26 billion settlement for thousands of lawsuits accusing them of fueling a public-health crisis, according to people familiar with the deal.
After years of negotiations with five states, the companies are poised to make the announcement Wednesday, according to the people who asked not to be identified discussing closed-door talks.
Along with J&J, the proposed settlement includes McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. More than 40 states are likely to sign onto the deal — others are expected to reject it in favor of moving ahead with existing court cases already set for trial, the people said.
The agreement likely removes a major overhang for companies seeking to end legal liabilities from their role in the opioid epidemic, analysts say.
McKesson, Cardinal Health and AmerisourceBergen already indicated in regulatory filings they expect to pay $21 billion, and J&J would pay $5 billion. What’s new is each state also has the option to accept just the J&J offer or the combined distributors’ proposal, and the companies will pay bonuses to states for how many of their local governments sign up, the people said.
New York Attorney General Letitia James said Tuesday her state was guaranteed to receive $1.1 billion in return for dropping claims against the three distributors.
The companies were part of a trial currently underway on Long Island. The judge in the case agreed to drop McKesson, Cardinal Health and AmerisourceBergen as defendants Tuesday. J&J agreed to pay $263 million earlier to get out of the case.
“While the companies strongly dispute the allegations at issue in the trial, they believe this resolution will allow the companies to focus their attention and resources on the safe and secure delivery of medications and therapies while delivering meaningful relief to affected communities,” the three distributors said in a joint statement.
Tennessee Attorney General Herbert Slatery led negotiations for the global settlement along with four other states designated to work out a deal: Texas, Pennsylvania, North CarTolina and Iowa.
Slatery’s office didn’t immediately respond to an email or phone call seeking comment after hours.
Under terms of the deal, states that weren’t part of the negotiations will have 30 days to decide whether to join the settlement, the people said.
Some states, including Ohio and Texas, already have agreements in place to divvy up money from opioid accords between state and local governments.
“There continues to be progress toward finalizing this agreement and we remain committed to providing certainty for involved parties and critical assistance for families and communities in need,” J&J said in a statement Monday reiterating its $5 billion offer. “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.”
Spokesmen for AmerisourceBergen, Cardinal Health and McKesson declined to comment.
States, cities and counties sued the companies over their roles in fueling the opioid epidemic, which claimed about 500,000 lives over the last 20 years. Government officials contend they were forced to spend billions on the fallout from addition to the painkillers and overdoses. They’re seeking funds to beef up treatment and policing budgets. Many of the cases have been consolidated before a federal judge in Cleveland.
McKesson, Cardinal Health and AmerisourceBergen executives are accused of turning a blind eye to suspiciously large opioid deliveries.
J&J is accused of reaping billions from illegal marketing of its former opioid-based products. All four companies face legal battles across the U.S. over their role in the public-health crisis.
McKesson, Cardinal Health and AmerisourceBergen are readying to make closing arguments in a West Virginia trial over claims they flooded the state with millions of pills to generate billions in profits.
J&J also currently is facing allegations of wrongdoing in connection with opioid painkillers in a California trial.
An Oklahoma judge ordered J&J to pay $465 million in 2019 after finding its opioid marketing in the state created a public nuisance. The Oklahoma Supreme Court is weighing the drug maker’s appeal of that verdict.
Despite the settlement, the New York case will continue against six defendants, including Teva Pharmaceutical Industries Ltd and Endo International Plc. Endo also faces an upcoming trial in Tennessee where 27 municipalities are seeking $2.4 billion in damages.
“While no amount of money will ever compensate for the millions of addictions, the hundreds of thousands of deaths, or the countless communities decimated by opioids, this money will be vital in preventing any future devastation,” James said Tuesday in a statement.
“We are gratified Nassau County’s landmark suit has held these companies accountable,” Hunter Shkolnik, one of the county’s lawyers, said Tuesday in a text.
Under the terms of the global accord with J&J, McKesson and the other distributors, local officials will have 40 days to persuade their cities and counties to participate, the people said.
The payments would take place over 18 years for the distributors and nine years for J&J. States that sign onto to the accord will get a base payment and then a bonus for how many local entities agree to the deal, the people added.
Local governments decided to sue opioid makers, distributors and pharmacy providers — such as Walmart Inc. — separately to avoid a repetition of what happened in the $246 billion settlement with tobacco makers in 1998. Much of that money wound up in state coffers and never made it down to the city and county level.
The consolidated case is In Re National Prescription Opioid Litigation, 17-md-2804, U.S. District Court, Northern District of Ohio (Cleveland).