US states to unveil $26 billion opioid settlement with drug distributors, J&J - sources

Pharmaceutical companies accused of helping to fuel nationwide opioid epidemic

U.S. state attorneys general and lawyers for local governments are expected this week to unveil a landmark, $26 billion settlement resolving claims that the three largest U.S. drug distributors and drugmaker Johnson & Johnson helped fuel a nationwide opioid epidemic, people familiar with the matter said.

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Under the settlement proposal, distributors McKesson Corp, Cardinal Health Inc and AmerisourceBergen Corp are expected to pay a combined $21 billion, while Johnson & Johnson said it would pay $5 billion.

More than 40 states are expected to support the settlement, the source said, while others could opt to move forward with their own cases.

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States will have 30 days to decide whether to join the global accord then more time to try to convince their cities and counties to participate in the deal, the sources said.

McKesson has previously said that of the $21 billion the three distributors would pay over 18 years, more than 90% would be used to remediate the opioid crisis while the rest would be used to pay plaintiffs' attorney fees and costs.

FILE PHOTO: A Johnson & Johnson building is shown in Irvine, California, U.S., January 24, 2017. REUTERS/Mike Blake/File Photo

Several states have passed laws or reached agreements with their political subdivisions to govern how settlement proceeds would be allocated in the event of a nationwide settlement.

The financial terms are in line with prior disclosures by the three distributors and J&J about what they expected to have to pay following long-running settlement talks.

"There continues to be progress toward finalizing this agreement and we remain committed to providing certainty for involved parties and critical assistance for families and communities in need," J&J said in a statement.

McKesson had no comment. The other two distributors did not immediately respond to a request for comment. They have all previously denied wrongdoing.

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Nearly 500,000 people died from opioid overdoses in the United States from 1999 to 2019, according to the U.S. Centers for Disease Control and Prevention (CDC). The opioid crisis appeared to worsen during the COVID-19 pandemic.

The CDC last week said provisional data showed that 2020 was a record year for drug overdose deaths with 93,331, up 29% from a year earlier. Opioids were involved in 74.7%, or 69,710, of those overdose deaths.

The distributors were accused of lax controls that allowed massive amounts of addictive painkillers to be diverted into illegal channels, devastating communities, while J&J was accused of downplaying the addiction risk.

Governments have said the money will be used to fund addiction treatment, family support programs, education and other health initiatives to address the crisis.

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

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The distributors have been in the midst of two trials nationally in the litigation, one in New York and one in West Virginia.

Closing arguments are expected in the West Virginia trial next week. Local West Virginia communities had opted out of the proposed nationwide deal to pursue one on their own.