Drug Wholesalers, Teva Settle With Ohio Counties Over Opioids

(Bloomberg) -- The three largest U.S. drug distributors and a major generic-drug manufacturer have agreed to pay more than $250 million to settle the first federal trial over the companies’ role in fueling the U.S. opioid epidemic.

Drug distributors McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp., plus drugmaker Teva Pharmaceutical Industries Ltd., entered into the agreement with two Ohio counties just before the start of the trial Monday in Cleveland, according to people familiar with the pact. The people asked not to be identified because the matter is still private.

The agreement is likely to help buy more time for a wider industry settlement in other opioid cases. McKesson, Cardinal and AmerisourceBergen, which together control 90% of the U.S. drug-distribution market, have proposed an $18 billion settlement for more than 2,000 other lawsuits filed by states, counties and cities, according to people familiar with those negotiations. No deal has been reached on that offer.

The settlement is expected to be announced in court later on Monday, said the people. Walgreens Boots Alliance Inc., the last remaining defendant, hasn’t yet reached a deal so far, said the people. The trial scheduled for Monday is likely to be canceled. A separate trial, involving claims by West Virginia municipalities, is scheduled for next year.

Shares of the companies fell before the markets opened in New York. McKesson dropped 2.1%, AmerisourceBergen was down 2.9%, Cardinal lost 2.4% and Teva declined 1.5%.

Opioid Defendants

The people said the settlement deal was reached at midnight after weekend-long talks in Cleveland. Other defendants in the case brought by the Ohio counties had already settled.

Last week, drugmaker Johnson & Johnson agreed to settle the Cleveland case for $20.4 million. J&J has separately offered $4 billion to settle all the opioid lawsuits against it.

Last month, generic-opioid manufacturer Mallinckrodt Plc settled for $30 million. A unit of Endo International Plc offered to pay $10 million and donate $1 million worth of drugs to avoid the trial, and Allergan Plc agreed to pay $5 million.

More than 400,000 Americans have died of opioid overdoses over two decades as U.S. addiction rates surged, and local communities have sued to recover expenses on more drug treatment and police services.

Drugmakers and distributors have been accused in thousands of lawsuits of turning a blind eye to red flags about unusually large opioid shipments and employing lax compliance standards to rake in billions in profits. The lawsuits are being overseen by U.S. District Judge Dan Polster in Cleveland.

The companies have been in talks with states, cities and counties in hopes of reaching an overarching agreement to resolve all the litigation.

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

©2019 Bloomberg L.P.

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