Endo Seeks Separate Settlement to End Opioid Lawsuits

(Bloomberg) -- Endo International Plc is seeking to resolve all lawsuits over its Opana painkiller in a deal that would cap its legal exposure and pull it out of talks with other drugmakers and distributors seeking an industrywide settlement of opioid litigation, according to three people familiar with the talks.

No numbers have yet been proposed in the talks between lawyers for Endo and attorneys for states, cities and counties, but there have been discussions about changing the way the company markets drugs, according to people who asked not to be named because the negotiations are private.

With the U.S. facing an opioid overdose epidemic, Dublin-based Endo is trying to resolve more than 1,000 suits filed against it by state attorneys general and private lawyers representing cities and counties by the end of the year, the people said.

A deal would allow Endo to close out a multibillion-dollar litigation threat as the company moves to cut costs and personnel to address an $8 billion debt load racked up by its former chief executive’s deal-making spree. It may also allow Endo to settle the claims more cheaply since it would be the first company to wave the white flag, said Elizabeth Burch, a University of Georgia professor who teaches about mass-tort cases.

“They would get the first-mover advantage on the settlement number and that may be driving this effort,’’ Burch said in an interview.

Endo spokeswoman Heather Zoumas Lubeski declined to comment.

The drugmaker’s shares rose more than 2 percent to $16.72 after news of the settlement talks was reported Thursday. They closed at $16.61, down 2.1 percent for the day. The shares have gained more than 180 percent since May as the company tries to turn itself around.

Debt holders also reacted positively to the news. Endo’s senior unsecured bonds maturing in 2023 were among the top gainers in the high-yield market, rising more than a cent on the dollar Thursday afternoon, according to Trace bond trading data.

“Were Endo able to negotiate a separate settlement agreement, it likely suggests a smaller settlement amount than most feared, resolved at an earlier date,” Mike Holland of Bloomberg Intelligence said. “Right or wrong, that positive price movement today reflects a potentially diminished risk.”

The governments contend Endo, Purdue Pharma LP, Johnson & Johnson, McKesson Corp. and other opioid makers and distributors downplayed the painkillers’ health risks and oversold their benefits through hyper-aggressive marketing campaigns. Plaintiffs are seeking to recoup the societal costs of dealing with opioid addictions and overdoses as part of a settlement they hope would be similar to the 1998 Big Tobacco accord that ultimately generated $246 billion.

Blame Companies

U.S. District Judge Dan Polster in Cleveland, overseeing a consolidation of the suits by cities and counties, is demanding a “meaningful’’ resolution of cases that blame the companies for creating a public-health crisis that is claiming the lives of more than 100 Americans every day. State attorneys general have filed separate cases in their own courts.

A deal independent of ongoing settlement talks might entice other opioid makers to break ranks and seek a separate resolution as well, Burch said.

“This is the first crack in the wall and it could lead to a stampede,’’ she said.

Connecticut Attorney General George Jepson, one of the leaders of the so-called “multi-state talks,’’ declined to comment on Endo’s effort to cut a separate deal. Paul Farrell, a West Virginia plaintiffs’ lawyer who is a co-leader of the consolidated cases before Polster, didn’t immediately respond to a phone call seeking comment.

A separate deal also could free Endo from having to contemplate bankruptcy to manage its opioid exposure, said Richard Ausness, a University of Kentucky law professor. Asbestos companies facing hundreds of billions in exposure from lawsuits over the insulation filed for Chapter 11 protection to set up trusts to hold down settlement costs, he said.

“It makes sense for a company with Endo’s financial challenges to come up with a deal and not wait for everyone else,’’ Ausness said. “In these situations, it’s every man for himself.’’

If Endo’s gambit is successful, it could spell trouble for the ongoing settlement talks hosted by the attorneys general and Polster, Ausness said. “This could cause the framework for producing a global settlement to collapse.”

Endo hasn’t promoted any pain products since December 2016 when the company cut its 375-person sales force as part of a restructuring. Purdue and other opioid makers have followed suit, halting opioid promotions and chopping sales staffs.

Endo withdrew Opana ER from the U.S. in July 2017 after the Food and Drug Administration took the rare step of asking the company to do so. The company still makes an immediate-release Opana but said it’s not promoted.

The consolidated case is In Re: National Prescription Opiate Litigation, 17-md-2804, U.S. District Court, Northern District of Ohio (Cleveland).

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