The ongoing opioid epidemic in the U.S. has seen the emergence of many legal cases being leveled against some of the country’s top pharmaceutical companies. Tens of thousands of individual cases, either on the municipal, state, or even federal level, are all going on simultaneously. However, a major upcoming federal trial that would see the majority of the country’s top opioid distributors go to court now seems close to reaching a major settlement agreement instead.
According to an exclusive story published by The Wall Street Journal, three of America’s top opioid distributors are in negotiates to pay as much as $18 billion to settle the case against them. In particular, McKesson (NYSE: MCK), AmerisourceBergen (NYSE: ABC), and Cardinal Health (NYSE: CAH), would all collectively pay around $18 billion over an 18-year period under the current proposed deal. Johnson & Johnson (NYSE: JNJ), a company which was a major producer of opioids, has come under fire itself over the past couple of months and is currently in talks as well to contribute additional funds in a settlement.
“As previously stated, we remain open to viable options to resolve these cases, including through settlement,” said a Johnson & Johnson representative when asked about the settlement. All three opioid distributors declined to comment when asked about the issue.
Currently, there are over 2,000 lawsuits leveled against the industry at large, blaming both opioid producers and distributors alike for deceptive and overly aggressive marketing that underplayed the addictive nature of these drugs. Each one of these cases has the potential to cost hundreds of millions if not billions in settlements or damages, representing a major liability to most companies involved in the opioid market. Since 1999, over 400,000 people have died due to opioid overdose, both from legal and illegal sources. Besides bringing these companies to trial, the prosecutors leading these cases hope to see pharmaceutical companies pay billions to aid in the medical care costs, emergency services, foster and community services that were required in the past and will be required in the future due to this epidemic.
Johnson & Johnson previously paid almost $600 million in an earlier ruling that found the company guilty of deceptive marketing for its opioid products. However, this figure was seen as being relatively small considering that prosecutors in the case wanted closer to $17 billion from the company. Other major pharmaceutical companies have ended up facing settlements in this range, with Purdue Pharma going bankrupt after reaching a $12 billion settlement for its own involvement in the opioid industry. In Purdue’s case, however, the company was a relatively small producer of opioids. This has led investors to worry that major producers and distributors could face settlements charges several times higher than that.
Many analysts have compared these opioid lawsuits as being similar to the lawsuits that the tobacco industry faced back in the 1990s, which led to a $206 billion cumulative settlement that still continues to be paid out to this very day. It wouldn’t be surprising to see a final settlement, when every municipal and state case is cleared, to range somewhere near that figure.