States and municipalities have 30 days to weigh in $ 26 billion opioid deal with major drug companies

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A group of state attorneys general on Wednesday unveiled a landmark $ 26 billion deal with major pharmaceutical companies for allegedly fueling the deadly nationwide opioid epidemic, but the deal still requires the support of thousands local governments.

Under the proposed settlement, the three largest U.S. drug distributors – McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. – are expected to pay together $ 21 billion, while drugmaker Johnson & Johnson would pay $ 5 billion.

The money should be used for drug treatment, family support, education and other social programs.

“Frankly, there isn’t enough money in the world to deal with the pain and suffering,” Connecticut Attorney General William Tong said, but added the money “will help where help is needed “.

The deal represents the second-largest cash settlement ever, following just the $ 246 billion tobacco deal in 1998. Attorneys general from 15 states were involved in negotiating the deal, as were officials. senior local government lawyers.

McKesson will pay up to $ 7.9 billion, while AmerisourceBergen and Cardinal have each agreed to provide up to $ 6.4 billion. Payments will be made over 18 years.

J&J will pay over nine years, with up to $ 3.7 billion paid in the first three years.

About $ 2.2 billion of the total would cover attorney fees and legal costs.

“This regulation will directly support state and local efforts to make meaningful progress in tackling the opioid crisis,” said Michael Ullmann, general counsel for Johnson & Johnson.

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To receive full payment, the deal needs the support of at least 48 states, 98% of disputing local governments, and 97% of jurisdictions that have yet to file a lawsuit.

Distributors have been accused of lax controls that have diverted massive amounts of addictive pain relievers into illegal channels, devastating communities, while J&J has been accused of downplaying the risk of addiction in its opioid marketing.

The companies have denied the allegations.

The regulation also calls for the creation of an independent clearinghouse to provide distributors and state regulators with aggregated data on drug shipments, which negotiators hope will help prevent abuse.

In a joint statement, the distributors called the settlement an important step “toward the comprehensive resolution of government opioid claims and providing meaningful relief to communities across the United States.”

More than 3,000 lawsuits related to the health crisis, mainly by state and local governments, have been filed, and final payment of the settlement depends on the number of locations that agree to drop their lawsuits.

Other settlements are also being negotiated, with opioid makers Purdue Pharma and Mallinckrodt Plc working through bankruptcy courts to secure support for settlements worth over $ 10 billion and $ 1.6 billion, respectively.

States will have 30 days to assess Wednesday’s deal. North Carolina Attorney General Josh Stein said it is expected that “well north of 40 will sign”.

The opioid crisis has been blamed for hundreds of thousands of overdose deaths in the United States since 1999, but has hit some regions much harder than others, creating divisions among governments when it comes to consider the settlement.

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“States that don’t sign are irresponsible,” Louisiana Attorney General Jeff Landry said. “We don’t want perfection to be the enemy of good.

Distributor shares each rose about 1.5%, while J&J, which also released its quarterly results on Wednesday, rose about 0.6%. Company shares had climbed Tuesday in anticipation of the announcement.

“NOT ALMOST GOOD ENOUGH”

Washington State Attorney General Bob Ferguson has said he will not join the deal. “The settlement is, to be frank, not good enough for Washington,” he said.

To receive full payment, the deal needs the support of at least 48 states, 98% of disputing local governments, and 97% of jurisdictions that have yet to file a lawsuit.

Choosing to participate guarantees a state only part of the money. The settlement provides for a base payment of up to $ 12.12 billion if all states agree to the agreement, and an additional $ 10.7 billion related to localities joining the agreement.

“Everyone has a common interest in getting the maximum stake to get the maximum amount of funds for nationwide reduction,” said Joe Rice, senior local government lawyer.

Once a state accepts the deal, its local governments have up to 120 days to join. They can only join if a state does. Paul Geller, a chief plaintiff negotiator, said if a state was unsure of joining, “the subdivisions should let the state know they want the money.”

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About half of the states, in anticipation of the settlement, have passed legislation or signed agreements with their localities governing how the settlement money will be distributed, according to Christine Minhee, who leads a supported opioid litigation monitoring project. by an Open Society Foundations Soros Justice Fellowship. .

Legislation does not guarantee success. In Indiana, cities and counties representing more than half of the state’s population withdrew after a law limited their reduction to 15%.

Indiana Attorney General Todd Rokita’s office said if these local governments do not revert to the deal, the state could lose up to $ 237.9 million of the $ 507 million it he would receive.

Hard-hit West Virginia communities withdrew from the deal after being offered less than 1% of the money, said Paul Farrell, a West Virginia plaintiffs attorney. Local state governments are pursuing a pending case against the distributors.

The settlement comes even as the crisis has shown no signs of abating. The United States Centers for Disease Control and Prevention said last week that provisional data showed 2020 to be a record year for the total number of drug overdose deaths, at 93,331, up 29% from the previous year.

(Reporting by Nate Raymond in Boston; Additional reporting by Brendan Pierson and Tom Hals; Editing by Bill Berkrot and Leslie Adler)

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