The nation's three top drug distributors and a major drugmaker reached a $260 million settlement with two Ohio counties Monday over the deadly havoc wreaked by opioids, striking a deal just hours before they were set to face a jury at the start of the first federal trial over the crisis.
The settlement means the closely watched trial will not move forward now. The trial involved only two counties — Cleveland's Cuyahoga County and Akron's Summit County — but was seen as an important test case that could gauge the strength of the opposing sides' arguments and prod them toward a nationwide settlement that ultimately would involve billions of dollars.
Across the country, the drug industry is facing more than 2,600 lawsuits brought by state and local governments seeking to hold it accountable for the opioid crisis that has been linked to more than 400,000 deaths in the U.S. over the past two decades. A federal judge in Ohio has been pushing the parties toward a settlement of all the lawsuits for nearly two years.
The agreement announced Monday calls for the drug distributors AmerisourceBergen, Cardinal Health and McKesson to pay a combined $215 million, said Hunter Shkolnik, a lawyer for Cuyahoga County.
Israeli-based drugmaker Teva would contribute $20 million in cash and $25 million worth of Suboxone, a drug used to treat opioid addiction.
"People can't lose sight of the fact that the counties got a very good deal for themselves, but we also set an important national benchmark for the others," Shkolnik said.
The deal contains no admission of wrongdoing by the defendants, said Joe Rice, a lead plaintiffs' lawyer.
Massive toll — on lives and the economy
The opioid epidemic has also taken, reaching at least $631 billion from 2015 to 2018 alone, according to a report released last week.
The crisis' costs aren't over. The crisis is projected to cost the economy up to another $214 billion in 2019, according to the authors of the study, which was conducted by Milliman, a provider of corporate actuarial services. Those losses, in lives and dollars, are likely to mount.
After five drug manufacturers, including Johnson & Johnson, reached settlements leading up to the trial, it became clear that the focus would be largely on the behavior of the distributors. Opening arguments were scheduled to begin Monday in U.S. District Court in Cleveland for the case involving claims bought by the Ohio counties of Cuyahoga and Summit.
After the new settlements and previous ones with other drugmakers, the only defendant left in the trial that had been scheduled for Monday is the pharmacy chain Walgreens. The new plan is for Walgreens and other pharmacies to go to trial within six months.
Monday's settlement removes the risks and uncertainties involved in a trial for both sides: The counties immediately lock in money they can use to deal with the crisis, and the drug companies avoid a possible finding of wrongdoing and a huge jury verdict.
"I have to say a day in court is always a good thing, but it doesn't always get you where you need to go, or as fast as you need to go there," Summit County Executive Ilene Shapiro said.
It also means that the evidence prepared for the trial won't be fully aired.
Suspicious sales trends
The plaintiffs had alleged before Monday's deal that distributors failed to uphold a requirement that they stop suspicious orders of controlled substances from being shipped. Federal data released as part of the litigation shows that 76 billion oxycodone and hydrocodone pills were shipped to U.S. pharmacies from 2006 to 2012, with shipments continuing to grow even after the U.S. Drug Enforcement Administration warned the drug industry about the increasing misuse of prescription opioids.
An Associated Press analysis found that in 2012, enough of the powerful and addictive painkillers were shipped for every man, woman and child in the U.S. to have nearly a 20-day supply.
The lawsuits also alleged that drugmakers improperly marketed opioids to prescribers, overselling the benefits and understating the risks of a class of drugs that has been known for centuries to be addictive. The industry has denied wrongdoing.
Lawyers for the counties were preparing to show jurors a 1900 first edition of "The Wonderful Wizard of Oz," featuring the poisonous poppy fields that put Dorothy to sleep, and a 3,000-year-old Sumerian poppy jug to show that the world has long known the dangers of opioids.
U.S. District Judge Dan Polster, who is overseeing the mountain of lawsuits, has long pushed for a coast-to-coast settlement that would provide money for treatment and other expenses associated with the crisis and force the industry to change its ways.
Industry CEOs and attorneys general from four states met Friday in Cleveland, where the offer on the table was a deal worth potentially $48 billion in cash and drugs to settle cases nationally.
But they couldn't close the deal, partly because of disagreements between state and local governments over how to allocate the settlement, which would have come from the three big distributors, Teva and Johnson & Johnson.
In a statement, the attorneys general from North Carolina, Pennsylvania, Tennessee and Texas, which are leading those talks, said that effort will continue — and that the Ohio settlement helps.
"People in every corner of the country have been hurt by this crisis, and it is critical that settlement funds be distributed fairly across states, cities and counties and used wisely to combat the crisis," they said.
OxyContin maker Purdue Pharma, often cast as the biggest villain in the crisis, reached a tentative settlement last month that could be worth up to $12 billion. But half the states and hundreds of local governments oppose it. It remains to be seen whether the settlement will receive the approvals it needs.
In a statement, Walgreens noted in its defense that it distributed opioids only to its own pharmacies, something it says differentiates the company from others in the industry.
"We never sold opioid medications to pain clinics, internet pharmacies or the 'pill mills' that fueled the national opioid crisis," the company said.
The epidemic has become more complicated in the past decade, with fatal overdose numbers rising largely because of illicit drugs such as heroin and fentanyl.
The settlement efforts until now have been mixed.
Four drugmakers reached deals only with the two Ohio counties — enough to get them out of the first trial, but leaving unresolved the claims from communities across the country.
OxyContin maker Purdue Pharma reached a tentative settlement last month that could be worth up to $12 billion over time. But half the states and hundreds of local governments oppose it. The company is now going through federal bankruptcy proceedings in White Plains, New York, creating the possibility that its settlement offer could be renegotiated.