The nation's three biggest opioid distributors and drugmaker Johnson & Johnson reached a $26 billion settlement to resolve thousands of lawsuits over the opioid epidemic, a crisis that has killed more than 500,000 Americans over the past two decades.
A bipartisan group of attorneys general announced Wednesday the agreement with three major drug distributors -- McKesson, Cardinal Health and AmerisourceBergen -- and drugmaker Johnson & Johnson, potentially releasing the companies from current and future litigation if a critical mass of communities across the country agrees to drop their cases.
The offer now will go out to every state and municipality in the country for approval. If enough of them formally sign on to it, billions of dollars from the companies could begin to be released to help communities pay for addiction treatment and prevention services, and other steep financial costs of the epidemic.
In return, the states and cities would drop thousands of lawsuits against the companies and pledge not to file any future action.
The settlement binds only these four companies -- the drug distributors Cardinal Health, AmerisourceBergen, McKesson and Johnson & Johnson -- leaving thousands of other lawsuits against many other pharmaceutical defendants, including manufacturers and drugstore chains, in the mammoth nationwide litigation still unresolved.
But these four companies are widely seen as among the defendants with the deepest pockets.
In an emailed statement, Michael Ullmann, executive vice president and general counsel of Johnson & Johnson, said: "We recognize the opioid crisis is a tremendously complex public health issue, and we have deep sympathy for everyone affected. This settlement will directly support state and local efforts to make meaningful progress in addressing the opioid crisis in the United States."
In a joint statement, the three distributors said: "While the companies strongly dispute the allegations made in these lawsuits, they believe the proposed settlement agreement and settlement process it establishes are important steps toward achieving broad resolution of governmental opioid claims and delivering meaningful relief to communities across the United States."
ACCUSATIONS
The distributors, which by law are supposed to monitor quantities of prescription drug shipments, have been accused of turning a blind eye for two decades while pharmacies across the country ordered millions of pills for their communities. Plaintiffs also allege that Johnson & Johnson, which used to contract with poppy growers in Tasmania to supply opioid materials to manufacturers and made its own fentanyl patches for pain patients, downplayed addictive properties to doctors as well as patients.
The financial and social harms of the epidemic far outweigh the proposed total settlement, said Gary Mendell, whose son Brian died in 2011 after battling addiction. But the agreement is a step toward remediating the crisis, he said.
"Getting this deal struck now and getting this money distributed fairly quickly, this is going to start to save people's lives right away," Mendell said.
According to federal data, from 1999 to 2019, 500,000 people died from overdoses of prescription and street opioids.
Last week the government announced that an estimated 69,710 people had died of overdoses involving opioids in 2020 -- a record 191 every day. Now the main culprit is illicit fentanyl manufactured in labs abroad. Opioid prescriptions have plummeted from a peak of 255.2 million in 2012 to 153.2 million in 2019, according to the Centers for Disease Control and Prevention.
SHIPMENTS TRACKED
Under the agreement, the country's three distributors would make payments over 18 years. Johnson & Johnson would pay $5 billion over nine years. A key feature of the agreement is that the distributors would establish an independent clearinghouse to track and report one another's shipments, a new and unusual mechanism intended to make data transparent and send up red flags immediately when outsize orders are made.
A separate deal between the companies and American Indian tribes is still being negotiated.
The agreement was presented by attorneys general from North Carolina, Pennsylvania, New York, Delaware, Louisiana, Tennessee and Connecticut.
Wednesday's announcement suggests that a critical element -- a large majority of states agreeing in principle -- has been met. But there are daunting obstacles remaining before any checks are actually cut.
The states and the District of Columbia will now have 30 days to closely review the agreement, including how much each would be paid over 17 years. Many states have not yet had the chance to scrutinize the deal. And while many permit their attorneys general to sign off, others require that legislators be consulted. An unspecified number of states must sign on for the deal to proceed. If that threshold is not met, the companies could walk away.
WHERE WILL MONEY GO?
A group of advocacy organizations, public health experts and others are pushing for governments to sign on to a set of principles for how settlement money should be used. They include establishing a dedicated fund for combating the epidemic with the settlement money and making sure that it doesn't just replace other funding streams in the budget.
The group has pointed out that many state and local governments have already made cuts to substance use and behavioral health programs because of economic downturn wrought by the coronavirus pandemic. And government officials may be tempted to fill holes in budgets with the money.
Paul Geller, a lawyer representing local governments, said the structure of the settlement ensures the money will be used as intended.
"It won't be used to fill potholes or build libraries or balance budgets," Geller said.
Those are the kind of things that a significant portion of the tobacco settlement money has been spent on, according to the Campaign for Tobacco-Free Kids, which tracks the money.
Campaign President Matthew Myers said the tobacco settlement is "one of the greatest missed public health opportunities of our lifetime."
"We would have saved massively more lives," he said if more money was spent on cessation and prevention.
The settlement was the result of states wanting to recoup health care costs associated with tobacco-related illnesses, while alleging that the industry misled the public.
Joelle Lester, director of commercial tobacco control programs at the Public Health Law Center in Minnesota, said the tobacco settlement was "both a huge success and a cautionary tale."
Information for this article was contributed by Jan Hoffman of The New York Times; by Merryl Kornfield and Lenny Bernstein of The Washington Post; and by Ben Finley and Geoff Mulvihill of The Associated Press.