States Reach $26 Billion National Opioid Settlement Agreement with Drug Makers

A bipartisan coalition of state attorneys general this week announced it has reached a national agreement for a $26 billion settlement with prescription drug manufacturers and distributors for their role in the opioid epidemic. The tentative agreement with the four companies, Johnson & Johnson, AmerisourceBergen, Cardinal Health, and McKesson, would establish the framework for significant nationwide investments in addiction treatment, prevention services, and other related expenses incurred in responding to the opioid epidemic. State negotiations were led by attorneys general of North Carolina and Tennessee, with involvement from California, Colorado, Connecticut, Delaware, Florida, Georgia, Louisiana, Massachusetts, New York, Ohio, Pennsylvania, and Texas.

In the case, Johnson & Johnson is accused of downplaying the addictive nature of opioid drugs to patients and providers, whereas the distributor companies are accused of not adequately tracking opioid prescription drug shipments, ostensibly flooding certain communities with opioid prescription drugs.

Under the agreement reached this week, the pharmaceutical companies would not acknowledge any wrongdoing in the epidemic. The three distributor companies (AmerisourceBergen, Cardinal Health, and McKesson) would make payments totaling $21 billion over 18 years. Johnson & Johnson would then pay $5 billion over nine years. One of the primary features of the agreement is that distributors would create a new system to track and report one another’s drug shipments. Johnson & Johnson would be prohibited from selling opioids for 10 years and would be subject to other related restrictions.

Total funding to be distributed will be determined by the overall degree of participation by litigating and non-litigating state and local governments. A formula has been developed to account for the number of opioid deaths, the number of residents with a substance use disorder, and the number of opioids prescribed. As part of the proposed settlement, California stands to receive a maximum of $2.34 billion if all California local governments join the agreement.

For the agreement to be finalized, however, states will have 30 days to review the agreement offers and structure, including how much funds each state would receive. Local governments will have 150 days to sign off on the agreement. It remains unclear how many states would need to agree to the settlement for the deal to be made final; if not enough states agree, the companies could retract the offer and continue litigation. The tentative settlement announced this week would resolve opioid-related claims of both states and local governments across the country.

Governor Gavin Newsom, following the announced agreement, issued a statement highlighting the impacts of the opioid epidemic on the state and acknowledging the opportunity to expand opioid prevention and treatment resources under the agreement framework. Additional information on the proposed settlement from California Attorney General Rob Bonta is available here.