Four state AGs propose $48 billion opioid settlement, but lawyer for cities says still not enough

A lawyer for more than 2,000 cities and counties suing opioid makers says a $48 billion deal touted by four state AGs still isn't big enough.
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Tablets of opioid painkiller Oxycodon.Eric Baradat / AFP - Getty Images file

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By Ben Kesslen, Laura Strickler and Adiel Kaplan

Four state attorneys general are pushing a $48 billion global settlement between states, cities, tribes and counties and the giant drug companies accused of causing and sustaining the opioid crisis, but an attorney representing the cities and counties says the number isn't big enough.

The Monday announcement by two Democratic and two Republican attorneys general came just hours after a last-minute settlement worth more than $250 million between the drug firms and two of Ohio's most populous counties prevented what would have been the first federal opioid trial from beginning. The trial was set to begin Monday morning in a Cleveland courtroom.

It would have been the first of many trials in which state and local governments are suing opioid manufacturers, distributors and retailers for their role in the opioid crisis.

A much larger, global deal between the drug companies and the states, tribes and nearly 3,000 cities and counties nationwide that are suing the firms is still elusive.

Under the "proposed settlement framework" announced by the four attorneys general, Johnson & Johnson and the four defendant companies that settled with the two Ohio counties early Monday — Cardinal Health, McKesson, AmersourceBergen, and Teva — would pay state and local governments $48 billion in cash and products.

The three drug distributors, Cardinal Health, McKesson and AmerisourceBergen, are responsible for the largest portion of the settlement and have agreed to also change internal policies to prevent future over-distribution.

"We are going to burn the midnight oil to get a settlement document," said Josh Stein, the North Carolina attorney general who announced the deal along with Attorneys General Josh Shapiro of Pennsylvania, Herbert Slattery of Tennessee and Ken Paxton of Texas. Stein and Shapiro are Democrats and Slattery and Paxton are Republicans.

Stein and the other three attorneys general did not say how many other state attorneys general are on board yet.

Paul Hanly, a lawyer representing the thousands of cities and counties involved in the suits, told NBC News that the deal does not work for his clients.

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Talks to settle the more than 2,000 lawsuits against the companies were underway last week, but tanked because cities and counties felt they wouldn't be getting enough of the settlement, Hanly said.

Last week, the cities and counties rejected a deal that would have given them $18 billion over 18 years. When lawyers for the plaintiffs ran the numbers on that proposed settlement, they found New York City would only have received $5 million to $6 million a year, even though it spent $500 million a year on the crisis, according to Hanly. They found similar discrepancies for other cities.

Lawyers for the plaintiffs also expressed worry that 18 years was too long of a timeline for the payout, given concerns that some of the companies could go bankrupt over the course of the payout.

Monday's announced framework would include more than $22 billion in cash and $26 billion in treatment drugs and delivery services over a much shorter span — 10 years.

Hanly said he thinks there will be another three to six months of negotiations before there is an overall settlement.

"This is the most complex negotiation in the history of litigation," he said.

Trial averted

Lawyers for Summit and Cuyahoga counties in Ohio announced early Monday that a settlement had been reached with McKesson Corp., Cardinal Health, AmerisourceBergen drug distributors and Teva Pharmaceutical, the maker of generic opioids. Walgreens Boots Alliance, the fifth defendant, has not yet announced an agreement.

The settlement was first reported by The Wall Street Journal. Cuyahoga, with a population of more than 1.2 million, is home to Cleveland, while nearby Summit County has more than 500,000 residents.

Armond Budish, Cuyahoga County executive, said, "When it became apparent that that was not going to come together before the trial today, the focus switched over the weekend to Cuyahoga and Summit Counties. As you can see that went much better."

The counties will receive $215 million in cash from the big three distributors, and Teva will provide an additional $20 million in cash, as well as $25 million worth of its anti-addiction drug Suboxone, Budish said, adding the counties will be figuring out how to use the money in the coming months.

"We are looking at using this money for treatment," said Michael C. O’Malley, Cuyahoga County prosecutor. "It's about rehabilitation and getting people straight."

In a joint statement, AmerisourceBergen, Cardinal Health and McKesson said the companies still strongly dispute the allegations made by the two Ohio counties, but think Monday's settlement "is an important stepping stone to achieving a global resolution and delivering meaningful relief."

The opioid manufacturer Purdue Pharma, deeply implicated in the opioid crisis, was also a target of the lawsuits, but filed for bankruptcy in mid-September. The lawsuits, the majority of which have been combined into one big case, allege 10 companies were responsible for starting and sustaining the opioid crisis. Plaintiffs believe the companies inundated communities with opioids without properly warning about the threat of addiction.

The opioid epidemic has cost the U.S more than $504 billion and killed more than 400,000 people, according to a 2017 report by the White House Council of Economic Advisers.

Associated Press contributed.