Last-ditch opioid settlement in Ohio could open door for much larger deal
By Lenny Bernstein, Scott Higham, Sari Horwitz and Aaron C. Davis
October 21, 2019
CLEVELAND -- Two Ohio counties and four drug companies settled a landmark lawsuit over responsibility for the opioid epidemic Monday in a deal that could help push the parties toward a wide-ranging agreement on more than 2,400 similar claims filed across the country.
The $260 million settlement, reached just hours before opening arguments were scheduled to begin in the first federal lawsuit of the opioid era, will give Cuyahoga and Summit counties badly needed cash and anti-addiction medication. Those will be provided by mammoth opioid distributors McKesson Corp., AmerisourceBergen and Cardinal Health, and drug manufacturer Teva Pharmaceuticals, four of the defendants in the first case.
But the agreement also may help guide the next round of negotiating as drug companies and governments that have sued them continue efforts to resolve the remaining legal actions all at once. "Hopefully it's a first step. We learned a lot. I think the defendants learned a lot" as the case moved toward trial, said Joseph F. Rice, one of the lead attorneys for the cities and counties whose cases have been consolidated into one "multidistrict litigation" in the federal courthouse here.
"And I believe there are a lot of corporations involved in the opioid crisis . . . that recognize that it's time for them to contact us, and let's see if we can put everybody together and get a global settlement."
The Ohio deal ratchets up the pressure on plaintiffs and drug companies to reach a global settlement or, some argue, to cut their own deals sooner. If the hundreds of lawsuits filed by cities, counties, Native American tribes and others continue to be settled individually, the first jurisdictions are likely to get larger payouts, attorneys said.
"This is a national crisis that demands a national solution," said North Carolina Attorney General Josh Stein said on a conference call Monday afternoon. "The trial date has now been resolved. It's in the past. And we can focus on coming up with what is going to do the best for our people."
But finding such a solution is posing challenges amid the tensions between the mostly private lawyers representing local governments and the elected state attorneys general, as well as between states devastated by the opioid crisis and those less affected.
In a moment of high drama Monday, U.S. District Judge Dan Aaron Polster, who has pushed for that global settlement for nearly two years, took his seat at the bench at 9:01 a.m. and announced the two-county Ohio settlement, which had leaked to the media before he spoke.
"I hope very productive discussions continue and we don't lose the momentum that was created," Polster said.
Hours later, a bipartisan group of state attorneys general said they had reached a $48 billion agreement in principle with the same four companies and Johnson & Johnson for a much larger nationwide deal.
They said they would press cities and counties to back the global settlement -- $22 billion in cash paid out over 18 years, and $26 billion in anti-addiction and drug treatment medication.
But that proposal is nearly the same one lawyers for the cities and counties rejected after 10 hours of bargaining Friday, and the lawyers were quick to say Monday that the sum is too small and the payout period much too long.
"They can keep repeating the same offer, but that doesn't mean it's going to happen, because it's not," said Paul J. Hanly Jr., another attorney for the cities and towns. "A majority of the towns and cities are opposed to this, and they are not going to accept it."
Democrats Stein of North Carolina and Josh Shapiro of Pennsylvania have been leading the negotiations for a proposed $48 billion national settlement, along with Republican attorneys general Herbert H. Slatery III of Tennessee and Ken Paxton of Texas.
In a conference call with reporters Monday, the four acknowledged the difficulty of persuading the cities and counties -- as well as other attorneys general -- to go along.
Asked on the call how many of their state counterparts were on board, the attorneys general declined to provide a number.
One proposal under discussion is to create a large national trust fund with rules under which cities, counties, states and others could apply for the money, said an attorney who spoke on the condition of anonymity because the idea is in its early stages. Polster or his designee might be tapped to control the fund, said the attorney.
More than 200,000 people have died of overdoses of prescription narcotics in the past two decades, and another 200,000 have succumbed to overdoses of heroin and illegal fentanyl, which is now the main driver of the worst drug crisis in U.S. history.
In August, an Oklahoma judge found health care giant Johnson & Johnson liable [1] for fueling the opioid epidemic in the first state court trial of its kind and ordered the company to pay $572 million. Johnson & Johnson has appealed that decision.
Polster selected the two Ohio counties in Monday's trial as a "bellwether" case, one designed to determine, via a jury verdict, how other plaintiffs might fare. A trial could have cost the companies more than $8 billion [2] if the counties were awarded all the money they were seeking.
In settling the case, however, the companies admitted no wrongdoing.
Greg McNeil, whose son became addicted to pain pills and died of a heroin overdose in 2015, said outside Polster's 18th-floor courtroom that families would have liked an apology from the companies.
"A settlement with an admission of wrongdoing would have begun to bring closure for families who have lost loved ones to the opioid epidemic," he said. "Sadly, that didn't happen."
Plaintiffs' attorneys said this and previous settlements were tantamount to an admission of culpability. "They paid over $323 million to these two counties," when previous settlements by Johnson & Johnson, Mallinckrodt Pharmaceuticals and other drug companies are included, Rice said. "One might say that's a pretty good admission."
Ilene Shapiro, county executive for Summit County, said the counties had sent a message to the drug industry.
"We started this originally to stop the [drug companies'] behaviors -- to hold these folks accountable," she said. "Enough is enough. We've got people dying on our streets."
The three wholesale distributors released a joint statement saying that "while the companies strongly dispute the allegations made by the two counties, they believe settling the bellwether trial is an important steppingstone to achieving a global resolution and delivering meaningful relief.
"The companies expect settlement funds to be used in support of initiatives to combat the opioid epidemic, including treatment, rehabilitation, mental health and other important efforts."
Walgreens, a fifth defendant, did not take part in the settlement. Its trial was postponed until early next year, when it may be joined by other companies that were dropped from the first trial by mutual consent.
The company issued a statement saying that the allegations against it were very different from those against the others companies. "We never manufactured, marketed or wholesaled prescription opioid medications," the statement said. "Our pharmacists have always been committed to serving patients in the communities where they live and work."
A sixth defendant, Henry Schein Medical, which distributed a tiny amount of opioids in Summit County and was sued only by that jurisdiction, said it had also reached a deal. Under the plan, the company will donate $1 million to establish an educational foundation in Summit County that will develop best practices for the proper use of prescription opioids and will pay $250,000 of Summit County's legal expenses.
The two-county Ohio settlement follows the collapse of an extraordinary effort [3] Friday to reach a deal covering all the cases. Polster had summoned the chief executives of the distributors and representatives of the other two companies to his courtroom.
Also called were the plaintiffs' lawyers and the four attorneys general who represented dozens of states that have been negotiating separately with the drug companies.
Polster shuttled among the parties, trying to find common ground. But after about 10 hours of talks, the parties were still far apart.
Negotiations continued over the weekend between the two Ohio counties and the drug companies, Hanly said. As of late Saturday, the distributors were offering $90 million, and the counties were holding out for $250 million. For the plaintiffs, he said, $200 million was an important target. Eventually, he said, the distributors raised their offer to $215 million, and the plaintiffs accepted.