Walmart, CVS Face Billions in Claims They Fueled Opioid Woes

(Bloomberg) -- Walmart Inc., CVS Health Corp. and Walgreens Boots Alliance Inc. face billions of dollars in damages as they go to trial over the role their pharmacies played in the U.S. opioid epidemic.

Two counties in Ohio will be among the first to try the companies in federal court over lawsuits filed by communities across the country. They say pharmacies created a public nuisance by failing to properly monitor doctor prescriptions and patient drug-use habits, forcing communities to spend taxpayer money to cope with addiction and fatal overdoses. Similar suits are pending against drug makers and distributors.

Ohio is one of the states hardest hit by the opioid crisis, which has killed almost 500,000 Americans over two decades. Trumbull and Lake counties allege they were flooded with 140 million pills from 2006 to 2012 as pharmacies turned a blind eye to suspicious prescriptions and didn’t make the required good-faith efforts to determine if they were legitimate.

“For many years, pharmacists were pulled in two directions,” said Elizabeth Chiarello, a St. Louis University sociologist who has studied the industry’s response to the opioid crisis. “They are required by law to fill legitimate prescriptions, but the chains want them to do it as fast and efficiently as possible,” which meant many didn’t provide much help in weeding out the so-called “pill-mill scripts,” she said.

The Cleveland case is the first jury trial of more than 4,000 opioid lawsuits consolidated before U.S. District Judge Dan Polster, who has been overseeing the litigation since 2018 and has encouraged a national resolution to all claims. While some local deals have been reached recently, Polster has been critical of pharmacy owners for failing to make better progress on a broader settlement.

A global deal could cost the pharmacies $10 billion to $15 billion, but they’re likely to proceed with early trials to bolster claims the companies will make to their insurers to cover any liability, according to Holly Froum, a litigation analyst at Bloomberg Intelligence. . 

Who Pays?

“Even if there’s a judgment, the conduct that serves as the basis of liability could be deemed to constitute negligence, such that insurance would have to indemnify them.”

Holly Froum, BI analyst. Click here to see report.

In August, Rite Aid Corp. was dropped as a defendant in the Cleveland trial after reaching a deal with Trumbull and Lake counties, court records show. Details weren’t disclosed, but people familiar with the deal said the company agreed to pay more than $3 million and that the payout is contingent on Rite Aid winning a coverage dispute with its insurers.

In July, Rite Aid, Walmart, CVS and Walgreens settled cases brought by two New York counties after the start of a state court trial, filings show. Suffolk County said the companies would pay it a combined $13 million. Nassau County didn’t disclose how much it would receive. Before that trial began, drugmaker Johnson & Johnson agreed to pay $263 million to settle claims against it. 

‘Strength of Arguments’

Alexandra Lahav, a University of Connecticut law professor who follows the opioid litigation, said she was surprised the Cleveland case hasn’t been settled before the trial. The remaining pharmacy defendants “must believe in the strength of their legal arguments,” she said.

Walmart and the other pharmacy operators say the counties can’t prove that dispensing prescriptions written by licensed doctors to manage patient pain created a public nuisance, which is defined as an “unreasonable interference with public health, public safety, public peace, or public comfort,” court filings show. 

“It would be entirely inappropriate for pharmacists to refuse to fill legitimate prescriptions written by legitimate doctors simply because they disagree with the prescriber’s medical judgment,” lawyers for Deerfield, Illinois-based Walgreens said in court filings.

The root of the opioid crisis in the two Ohio counties isn’t diversion of prescription drugs, but “driven to a large extent by the widespread availability of heroin, illicit fentanyl, and other illicit drugs trafficked by criminal drug gangs,” Walgreens said.

Walmart contends it “does not belong” in the Ohio case because it’s five pharmacies in the counties account for little more than 3% of the opioids dispensed locally, according to court filings. The company also said it has a robust monitoring system for controlled substances like opioids.

Dispensing Drugs

“Walmart hired only credentialed, trained, and licensed pharmacists,” the company’s lawyers said in court filings. “Walmart then provided multiple resources to further assist those pharmacists in dispensing controlled substances.”

Randy Hargrove, a Walmart spokesman, declined to comment on the upcoming trial. Christopher Savarese, a Rite Aid spokesman, didn’t respond to requests for comment.

“Our pharmacies fill legitimate prescriptions written by licensed doctors,” Mike DeAngelis, a CVS spokesman, said in an emailed statement. The chain followed the law, he said.

“We never manufactured or marketed opioids, and never sold opioids to the pain clinics, internet pharmacies or the pill mills that fueled the opioid crisis,” Walgreens spokesman Phil Caruso said.

In his open statement to the jury on Monday, Walgreen’s lawyer Kaspar Stoffelmayr said the chain had policies in place for decades aimed at helping their pharmacists weed out inappropriate opioid prescriptions.

“The pharmacist’s job is to make sure people get their medications,” Stoffelmayr said. “But our policies tell them to use their good-faith judgment on whether a prescription if legitimate and we’ll back them all the way.”

But the Ohio counties claim the pharmacies ignored obvious red flags about opioid prescriptions -- including out-of-state patients traveling hundreds of miles to get painkillers -- and violated state and federal laws to pump up profits.

“I’m not pointing the finger at the pharmacists,” Mark Lanier, a lawyer for the Ohio counties, told jurors Monday in opening statements. “I’m pointing at the big businesses behind” the policies that allowed the inappropriate opioid dispensing, he said.

Evidence will be presented that shows pharmacy providers didn’t have robust systems for identifying suspicious opioid prescriptions until the epidemic was far along, Lanier said.

Lawyers for the other pharmacy providers will give their opening statements on Tuesday.

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

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