Three major drug distributors have proposed paying $10 billion to settle claims that they played a role in fuelling the US’ opioid epidemic by downplaying risks and flooding the market with pills – but plaintiffs want much more.
It’s the first time in two years of discussions that the three companies – McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. – have put a figure on the table in an attempt to resolve the lawsuits against them, Bloomberg reported.
The companies reportedly made a verbal proposal during ongoing talks – but the National Association of Attorneys General, which is handling the discussions on behalf of more than 35 states, countered the offer with a demand for $45 billion to help solve the public health crisis of opioid addiction.
A McKesson spokeswoman denied that a settlement offer had been made, but Bloomberg’s sources said that there had indeed been an opening offer. AmerisourceBergen and Cardinal Health declined to comment.
The central claim in the lawsuits is that drug manufacturers, including Purdue Pharma LP and Johnson & Johnson, “downplayed the health risks of opioids and oversold their benefits through hyper-aggressive marketing campaigns,”Bloomberg said. The distributors, which plaintiff’s believe have deeper pockets, however, are accused of ignoring red flags and flooding the market with pills.
The first trial, one of many local-government claims, was due to begin in October, but the companies want a delay, saying they need more time to prepare for what will be “one of the most complicated trials in legal history.”
The report highlighted alarming numbers, which put the US’ opioid epidemic into perspective. A pharmacy in Kermit, West Virginia – a town of only 400 people – received nearly 5 million doses of drugs from McKesson between 2005 and 2006. Only 30 miles away, the company shipped more than 5.8 million to another town with a population of only 1,800. In total, McKesson, Cardinal Health, AmerisourceBergen and other distributors shipped 76 billion pain pills over a six-year period, sending addiction rates and deaths to record levels.
The distributors saw their shares fall after reports of the settlement offer.
A global settlement covering manufacturers and distributors could end up costing the companies between $30 billion and $55 billion, according to Nephron Research – but Wells Fargo analysts David Maris said the ultimate figure could be as high as $100 billion. Any settlement figure reached would be paid out over decades.
There have been some smaller settlements already. West Virginia, which has the highest rate of drug-overdose deaths in the country, accepted $37 million from McKesson after the state alleged it distributed drugs there improperly.
Oklahoma chose to sue drug makers instead of distributors and accepted a $270 million payout from Purdue in March. The state wants $17.5 billion from Johnson & Johnson, which it has called the opioid crisis “kingpin.”
The companies deny allegations that they are responsible for fuelling the public health crisis. They have attempted to pin blame on doctors for over-prescribing drugs and claim they complied with all state and federal laws.
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