Drug distributor McKesson and manufacturers reach a deal with the state.
The State of Alabama recently announced that it has reached a $276 million settlement with opioid manufacturers and distributors McKesson Corp., Endo International Plc and Johnson & Johnson (J&J). It was one of only four states to refuse to join the nationwide $26 billion settlement involving McKesson, Cardinal Health and AmerisourceBergen as well as J&J, which finalized in February 2022.
J&J, McKesson, Cardinal Health, and AmerisourceBergen previously reached a settlement out of Cleveland, Ohio, with Native American tribal communities. All 574 federally recognized tribes were eligible to receive part of the settlement even if they did not file legal action against any of the companies. As part of the deal, J&J and its subsidiary, Janssen, would pay out $150 million over two years while the distributors would pay roughly $440 million over seven years.
Fifteen percent of the previous settlement’s funds went towards attorney’s fees while the remaining 85 percent will be spent on “drug treatment and related abatement programs,” according to court documents. These treatment options will be made available to the communities impacted by the crisis.
At the time, J&J said the proposed settlement “is not an admission of liability or wrongdoing and that its marketing and promotion of opioids was appropriate and responsible.” AmerisourceBergen said the deal “will both expedite the flow of resources to communities impacted by the crisis while enabling AmerisourceBergen to focus on ensuring the pharmaceutical supply chain is meeting the needs of health care providers and patients.”
As part Alabama’s settlement, distributor McKesson is set to pay $141 million, J&J will pay more than $70 million and Endo International is set to pay $25 million. Roughly $40 million will also be paid in attorneys’ fees to cover the opioid cases against the companies.
“Alabama would have received $115 million over 18 years from McKesson under the national settlement framework, and J&J would have paid $70.3 million over nine years. Under the new settlement, J&J will now make full payment within a year, while McKesson will pay within nine years,” Marshall said.
The state had alleged that McKesson was negligent in preventing the diversion of opioids for illicit use. It also accused the drugmakers of “engaging in deceptive marketing practices that downplayed the addiction risks of their painkillers.”
Marshall added, “These three settlement agreements affirm my decision to decline participation in the national opioid settlements, which did not adequately acknowledge the unique harm that Alabamians have endured.” He also said that “Alabama will get more from McKesson and a faster payout from J&J, compared to what the state would have received under the national settlement.”
All three of the companies have denied any wrongdoing. J&J specifically noted again that the company no longer sells prescription opioids in the United States and referred to its past marketing attempts for its these drugs as “appropriate and responsible.”
To date, the crisis has caused more than 500,000 overdose deaths over the last twenty years, according to the U.S. Centers for Disease Control and Prevention (CDC).