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Wednesday, July 21, 2021

NY Attorney General James Announces Proposed $26 Billion Global Agreement with Opioid Distributors/Manufacturer

New York Attorney General Letitia James today announced a historic proposed $26 billion agreement that will help deliver desperately needed relief to communities across New York and the rest of the nation struggling with opioid addiction. 

The proposed agreement will resolve claims against three of the nation’s largest drug distributors — McKesson Corporation, Cardinal Health Inc., and Amerisource Bergen Drug Corporation — as well as one of the nation’s largest drug manufacturers — Johnson & Johnson (J&J) — over the companies’ roles in creating and fueling the opioid epidemic. New York communities ravaged by opioids will specifically receive up to $1.25 billion to fund prevention, treatment, and recovery programs (the terms of New York’s specific settlements were previously announced with both the three distributors and with J&J). Additionally, today’s proposed agreement requires significant industry changes that aim to end the opioid epidemic and prevent this type of crisis from occurring again.

“The numerous companies that manufactured and distributed opioids across the nation did so without regard to life or even the national crisis they were helping to fuel,” said Attorney General James. “Johnson & Johnson, McKesson, Cardinal Health, and Amerisource Bergen not only helped light the match, but continued to fuel the fire of opioid addiction for more than two decades. Today, we are holding these companies accountable and infusing tens of billions of dollars into communities across the nation, while taking significant steps to hold these companies accountable. Johnson & Johnson will stop the sale of opioids nationwide, and McKesson, Cardinal Health, and Amerisource Bergen are finally agreeing to coordinate and share their data with an independent monitor to ensure this wildfire does not continue to spread any further. While no amount of money nor any action can ever make up for the hundreds of thousands of lives lost or the millions more addicted to opioids, we can take every action possible to avoid any future devastation.”

The proposed global agreement — if approved by a substantial number of states and local governments across the country — would resolve the claims of nearly 4,000 entities that have filed lawsuits in federal and state courts against the four companies. New York has already signed on to today’s agreement, while other states have 30 days to sign onto the deal. Local governments in the participating states will have up to 150 days to join. States and their local governments will receive maximum payments if each state and its local governments join together in support of the agreement.

Global Funding:
  • The three distributors collectively will pay up to $21 billion over the next 18 years. 
  • Johnson & Johnson will pay up to $5 billion over nine years, with up to $3.7 billion paid during the first three years. 
  • The total funding distributed will be determined by the overall degree of participation by both litigating and non-litigating state and local governments. 
  • Nationwide, the substantial majority of the money is to be spent on opioid treatment and prevention. 
  • Each state’s share of the funding has been determined by an agreement among the states using a formula that takes into account the impact of the crisis on the state — specifically, the number of overdose deaths, the number of residents with substance use disorder, and the number of opioids prescribed — and the population of the state.

Global Injunctive Relief:

The 10-year proposed agreement will result in court orders requiring McKesson, Cardinal, and Amerisource Bergen to:
  • Establish a centralized independent clearinghouse to provide all three distributors and state regulators with aggregated data and analytics about where drugs are going and how often, eliminating blind spots in the current systems used by distributors. 
  • Use data-driven systems to detect suspicious opioid orders from customer pharmacies.
  • Terminate customer pharmacies’ ability to receive shipments, and report those companies to state regulators, when they show certain signs of diversion.
  • Prohibit shipping of and report suspicious opioid orders. 
  • Prohibit sales staff from influencing decisions related to identifying suspicious opioid orders.
  • Require senior corporate officials to engage in regular oversight of anti-diversion efforts.
  • The 10-year proposed agreement will result in court orders requiring Johnson & Johnson to: 
  • Stop selling opioids. 
  • Not fund or provide grants to third parties for promoting opioids.
  • Not lobby on activities related to opioids.
  • Share clinical trial data under the Yale University Open Data Access Project.

This proposed settlement comes as a result of investigations by state attorneys general into whether the three distributors fulfilled their legal duty to refuse to ship opioids to pharmacies that submitted suspicious drug orders and whether Johnson & Johnson misled patients and doctors about the addictive nature of opioid drugs.

In March 2019, Attorney General James filed the nation’s most extensive lawsuit to hold accountable the various manufacturers and distributors responsible for the opioid epidemic. The manufacturers named in the complaint included Purdue Pharma and its affiliates, as well as members of the Sackler Family (owners of Purdue) and trusts they control; Janssen Pharmaceuticals and its affiliates (including its parent company Johnson & Johnson); Mallinckrodt LLC and its affiliates; Endo Health Solutions and its affiliates; Teva Pharmaceuticals USA, Inc. and its affiliates; and Allergan Finance, LLC and its affiliates. The distributors named in the complaint were McKesson Corporation, Cardinal Health Inc., Amerisource Bergen Drug Corporation, and Rochester Drug Cooperative Inc.

The cases against Mallinckrodt and Rochester Drug Cooperative are now moving separately through U.S. Bankruptcy Court. The case against Purdue and the Sacklers is also moving through U.S. Bankruptcy Court, but, earlier this month, Attorney General James and a majority of states announced their approval of an agreement that would force the Sacklers and entities they control to pay more than $4.5 billion for opioid abatement, as well as shut down Purdue, and ban the Sacklers from ever selling opioids again. The agreement is pending court approval.

The trial against the three remaining defendants — Endo Health Solutions, Teva Pharmaceuticals USA, and Allergan Finance — is currently underway and will continue in state court.

Separately, but related to her work on opioids, this past February, Attorney General James co-led a coalition of nearly every attorney general in the nation in delivering more than $573 million — more than $32 million of which was earmarked for New York state — toward opioid treatment and abatement in an agreement and consent judgment with McKinsey & Company. The agreement with one of the world’s largest consulting firms resolved investigations by the attorneys general into the company’s role in working for opioid companies, helping those companies promote their drugs, and profiting millions of dollars from the opioid epidemic.

Combined, Attorney General James’ negotiations have yielded the potential for New York to receive over $1.6 billion to combat the opioid crisis.

Joining Attorney General James in leading the state negotiations were the attorneys general of California, Colorado, Connecticut, Delaware, Florida, Georgia, Louisiana, Massachusetts, North Carolina, Ohio, Pennsylvania, Tennessee, and Texas.

For the Office of the New York Attorney General, this negotiation was led by First Deputy Attorney General Jennifer Levy and Assistant Attorney General Conor Duffy.

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Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (Thomson-Reuters). For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  jon@gelmans.com  has been representing injured workers and their families who have suffered occupational accidents and illnesses.

Blog: Workers ' Compensation

Twitter: jongelman

LinkedIn: JonGelman

LinkedIn Group: Injured Workers Law & Advocacy Group

Author: "Workers' Compensation Law" Thomson-Reuters