October 24, 2019 / 10:04 AM / 9 months ago

Several states wary of $48 billion opioid settlement proposal

    By Tom Hals and Nate Raymond
    Oct 24 (Reuters) - Several U.S. states that have been
ravaged by the opioid epidemic are pushing back on a proposed
$48 billion settlement framework that would resolve thousands of
lawsuits against five drug companies accused of fueling the
addiction crisis. 
    The proposal would bring an end to all opioid litigation
against AmerisourceBergen Corp       , Cardinal Health
Inc        and McKesson Corp       , drugmaker Teva
Pharmaceutical Industries Inc                 , and Johnson &
Johnson       . 
    The companies have proposed paying $22.25 billion cash
mostly over 18 years, while services and drugs to treat
addiction valued at $26 billion by the companies would be
provided over the coming decade, mostly by Teva.
    Officials in states such as Ohio, New Hampshire and West
Virginia -- all hard hit by the deadly drug addition crisis --
voiced concerns about the proposal.
    James Boffetti, the associate attorney general for New
Hampshire, said in an interview he was troubled that payments
were stretched over many years.
    "The concern is, I think, the states need money now to
create the infrastructure for treatment," he said.  
    Small states fear the money will be divvied up by population
rather than need.
    "Any global opioid settlement that doesn't reflect the
unique and unprecedented damage imposed on West Virginia through
the opioid epidemic should be DOA," West Virginia Attorney
General Patrick Morrisey said on Twitter on Tuesday.  
    Some 400,000 U.S. overdose deaths between 1997 and 2017 were
linked to opioids, according to government data. Roughly 2,600
lawsuits have been brought nationwide by states, local and
tribal governments.
    The three distributors in a joint statement said they were
committed to finalizing a global settlement and would continue
working with the other parties on the details of the framework.
Teva declined to comment. 
    J&J said in a securities filing on Wednesday the deal would
lower third quarter profit by $3 billion.             
    The proposal, announced on Monday, was hammered out by the
companies and attorneys general in North Carolina, Pennsylvania,
Tennessee and Texas. 
    It will need broad support among state attorneys general and
will have to overcome opposition from the lawyers representing
local governments that sued. Those lawyers declined to sign on
when presented the proposal last week.
    Under the settlement framework, money for each state would
be divvied up, with 15% going to the state treasury, 15% for
local governments that filed lawsuits and 70% going to a
proposed state fund aimed at addressing the crisis.
    Boffetti predicted it would takes weeks for states to
determine whether they back the settlement framework.
    North Carolina's attorney general, Josh Stein, acknowledged
that a detailed term sheet needs to be developed.
    "There are a lot of details and mechanics that need to be
added to it," Stein told Reuters in an interview. "That will
happen in the coming weeks."  
    The proposal did win a major supporter on Tuesday. Tom
Miller of Iowa, the longest-serving attorney general, publicly
backed the proposal, calling the framework "an important step in
addressing the crisis."
    Colorado's attorney general, Phil Weiser, called it a "very
promising development."
    The lawsuits accuse distributors of failing to flag and halt
a rising tide of suspicious orders and drugmakers of overstating
the benefits of opioids while downplaying the risks.
    The companies have denied any wrongdoing. Drugmakers say
their products carried government-approved labels that warned of
the addictive risks of opioids, while distributors argue their
role was to make sure medicines prescribed by licensed doctors
were available for patients.     
    The proposed deal has widened a fault line between attorneys
general and local governments.
    Cities and counties generally hired private attorneys to
bring their cases, and attorneys general want to limit the
amount of the settlement that goes to pay private lawyers.    
The attorneys for local governments also generally opposed Teva
contributing opioid treatment drugs to the settlement, instead
of cash, in part because of concerns that the framework placed
an inflated value on those drugs.             
    Last week's talks failed to reach a global deal, and on
Monday, the three wholesale distributors and Teva struck a
last-minute $260 million settlement with two Ohio counties,
averting the first federal trial over opioids.             
    North Carolina's Stein said he looked forward to resolving
concerns about the proposal and warned that settling lawsuits
individually was unsustainable.
    "If we proceed on the current path and each county and city
brings their case and extracts whatever amount they may be able
to get from these companies, the companies will end up
bankrupt," he said. "The opioid crisis is a national problem
that demands a national solution."

 (Reporting by Tom Hals in Wilmington, Delaware and Nate Raymond
in Boston, Massachusetts
Editing by Noeleen Walder and Sandra Maler)
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