McKesson Says Opioid Distributors May Pay $21 Billion in Deal

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McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. may pay as much as $21 billion -- $3 billion more than they offered last year -- to resolve lawsuits accusing them if mishandling deliveries of opioid painkillers and fueling a public-health crisis in the U.S.

In a regulatory filing on Tuesday, McKesson said a group of state attorneys general have proposed the companies pay $21 billion over 18 years to settle more than 3,000 lawsuits filed by state and local governments seeking compensation for the costs of the opioid epidemic. The filing was first reported by Reuters.

State officials and lawyers for municipalities are also seeking a $5 billion payout by Johnson & Johnson, and there are thousands of other pending claims against other drug makers, distributors and pharmacies.

“If the negotiating parties agree on the terms for a broad resolution, those potential terms would need to be agreed to by numerous other state and local governments before an agreement could be accepted by the company and finalized,” McKesson officials said in the 59-page filing with the U.S. Securities and Exchange Commission.

Representatives of Dublin, Ohio-based Cardinal Health and Chesterbrook, Pennsylvania-based AmerisourceBergen didn’t immediately return calls and emails seeking comment on the McKesson filing.

States, cities and counties sued McKesson and the other distributors over their role in fueling the U.S. opioid epidemic, which has claimed more than 400,000 lives from 1997 to 2018.

The governments contend they were forced to spend billions on the fallout from opioid addiction and overdoses and seek to use settlement funds to beef up treatment and policing budgets. Many of the cases have been consolidated before a federal judge in Cleveland.

Suspicious Deliveries

McKesson, Cardinal Health and AmerisourceBergen executives are accused of turning a blind eye to suspiciously large opioid deliveries to bolster billions in profits.

A group of attorneys general, led by Tennessee Attorney General Herbert Slatery, worked out the settlement covering the distributors and J&J after more than a year of talks. Other attorneys general and some lawyers for cities and counties oppose the proposal, saying it doesn’t provide enough funds for treatment.

McKesson said in the filing it would be responsible for $8 billion of the $21 billion, and that the amount the company had to pay would be tied to the level of acceptance of the deal by state, city and county officials.

“If states, political subdivisions or other governmental entities did not agree to a settlement under the framework, there would be a corresponding reduction in the amount due from” McKesson, the company said.

Settlement talks continue and chances of a final deal haven’t reached the stage where resolution of the suits is probable, the company said in the filing.

McKesson and other distributors also are readying for possible trials for opioid lawsuits in West Virginia and California next year, according to the filing.

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

©2020 Bloomberg L.P.

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