Four Opioid Companies Avoid Federal Trial in Cleveland With $260 Million Settlement
With Lawsuits Settled, the Opioid Trial in Cleveland Will Not Proceed
The litigation timeline for over 2,600 lawsuits against Opioid manufacturers and distributors was scheduled to culminate in a federal trial in Cleveland, Ohio on October 21. However, four of the defendants reached a settlement with Summit County and Cuyahoga County, the two plaintiffs, on the morning of the trial date. As a result of the last-minute agreement, the four companies withdrew from the trial, leaving only one defendant. The federal judge who would have overseen the trial then decided to cancel it.
In the early hours of October 21, McKesson Corporation, Cardinal Health Inc., AmerisourceBergen Corporation, and Teva Pharmaceutical Industries, the parent company of Actavis Generics, agreed to pay the two counties a $260 million settlement. Under the terms of the settlement, the four Opioid distributors will immediately pay the counties $215 million. Teva, the largest manufacturer of generic medications in the world, will also pay the two counties an additional $20 million and donate them a $25 million supply of Suboxone over the course of the next eighteen months. Summit County and Cuyahoga County are part of northeastern Ohio, the state which suffered the second-highest rate of Opioid-related deaths in 2017. They will use the damages from the settlement to fund rehab for Opioid addiction and medical care for overdose victims.
The Background of the Trial
Summit County and Cuyahoga County were just two claimants among thousands of states, counties, cities, and Native American tribes which have filed lawsuits against corporations which manufacture and sell prescription Opioids. The plaintiffs allege that the corporations misled doctors and the public about the dangers of Opioids and caused the current Epidemic of Opioid addiction and overdose. The CDC estimates that the Opioid Epidemic has claimed the lives of about 400,000 Americans in the past twenty years.
In a joint statement, the former defendants clarified that the settlement does not constitute an admission of guilt. “While the companies strongly dispute the allegations made by the two counties, they believe settling the bellwether trial is an important stepping stone to achieving a global resolution and delivering meaningful relief,” the statement read. The Cleveland trial was a “bellwether” or test trial because observers expected it to serve as a model for how courts across the country would award damages to plaintiffs in Opioid lawsuits.
Other Defendants Withdraw, but Walgreens Holds Out
As the trial approached, almost every defendant reached settlements with the two counties. In August, Allergan and Endo Pharmaceuticals settled for $15 million. In September, Mallinckrodt Pharmaceuticals settled for $30 million. That same month, Purdue Pharmaceuticals declared bankruptcy protection and agreed to pay the two counties a portion of its $12 billion settlement with over 2,000 claimants, including 24 states. In October, Johnson & Johnson removed itself from the trial by offering the two counties a $20.4 million settlement. The two counties also withdrew their claims against one minor defendant, Henry Schein Medical, after the surgical supplies company offered to donate $1 million to Summit County and pay some of its legal expenses.
The only defendant that did not offer a settlement by October 21 was Walgreens. Although the two counties sued Walgreens as both a pharmacy and a distributor, Walgreens denies profiting from Opioids and insists that its stores merely filled legitimate Opioid prescriptions. In the absence of a settlement, a trial against Walgreens will take place within the next six months.
The Parties Fail to Reach a Global Settlement
While the four companies negotiated their way out of the Cleveland trial, lawyers representing the pharmaceutical industry met with attorneys-general from four states to attempt to reach a global (all-encompassing) settlement, one which would resolve thousands of lawsuits at once and end the litigation process. The attorneys-general of Tennessee, North Carolina, Pennsylvania and Texas announced on October 21 that they had agreed to a “framework” for a $48 billion settlement with McKesson, Cardinal Health Inc., AmerisourceBergen, Teva, and Johnson & Johnson. Under the framework, the corporations would pay the plaintiffs about $22 billion and donate an additional $26 billion in treatment services over the course of eighteen years.
Josh Stein, the Attorney General of North Carolina, called on other states and counties to support the global settlement, but several states immediately condemned the proposal as insufficient, with the attorneys-general of Ohio, New Hampshire, and West Virginia all expressing concerns that smaller states would not receive fair portions of the damages. Nevertheless, other states greeted news of the global settlement proposal with more optimism. The Attorney General of Iowa called the framework “an important step in addressing the crisis” and the Attorney General of Colorado described it as “a very promising development.”
Paul Hanly, one attorney for the local governments which have filed claims against Opioid companies, agreed with the states that oppose the framework that Big Pharma should pay more money to adequately resolve the Opioid Epidemic. The counties and cities which he represents rejected the global settlement proposal. The settlement would allocate $18 billion to cities and counties, with each claimant receiving a portion of this sum. For example, New York City would only receive about $5 million annually, but America’s largest city has already spent $500 million on the Opioid crisis this year. According to Hanly, Big Pharma and thousands of claimants seeking damages will have to continue negotiating for as many as six more months to reach an acceptable agreement.