State could get $460 million over 18 years from $26 billion opioid deal

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FRANKFORT, Ky. (WTVQ) – Kentucky and other states have proposed a $26 billion agreement with three opioid distributors and one manufacturer for the companies’ role in creating and fueling the opioid epidemic.

The deal with Cardinal, McKesson, and AmerisourceBergen – the nation’s three major pharmaceutical distributors – and Johnson & Johnson, which manufactured and marketed opioids, would resolve the claims of both states and local governments across the country, including the nearly 4,000 that have filed lawsuits in federal and state courts.

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The proposal still must be approved by the states and local governments, according t a press release from the New York attorney general’s office which was one of the 14 states that spearheaded the proposal which Kentucky joined later.

The agreement also requires significant industry changes that will help prevent a crisis, like the opioid epidemic, from happening again.

States have 30 days to sign onto the deal.

The Kentucky Attorney General’s office is reviewing the proposed agreement. If approved, Kentucky stands to receive more than $460 million over 18 years because all local governments are on board.

The money provide the state and local governments with substantial funds to support Kentuckians struggling with addiction.

Kentucky’s share will be distributed under the terms of House Bill 427, which was sponsored by Representative Danny Bentley and passed by the General Assembly earlier this year.

“Today’s announcement marks the end of a long and hard-fought negotiation to ensure that opioid distributors are held accountable for their role in the opioid crisis and that the Commonwealth receives needed funds for opioid abatement programs,” said Attorney General Daniel Cameron.

Cameron worked with legislators, the Kentucky Association of Counties, and the Kentucky League of Cities to reach the terms outlined in House Bill 427. The bill provides local governments will receive 50 percent of all proceeds from the settlement, with the Commonwealth receiving the other 50 percent.

The Commonwealth’s portion, if the agreement ultimately is approved, will be managed by the Kentucky Opioid Abatement Advisory Commission.

“This is a significant day in the fight against the scourge of opioids here in our Commonwealth,” said state Senate President Robert Stivers. “The more than $460 million will be crucial as we continue to fight this epidemic at both the state and local levels.”

“Today’s announcement is an important step toward remediating the opioid epidemic in Kentucky,” said Bentley. “Our citizens have suffered for far too long, and this settlement, once final, will allow Kentucky to combat that suffering.”

Madison County Judge Executive Reagan Taylor, who is president of the Kentucky Association of Counties, also praised the deal.

“Today’s announcement of this historic opioid litigation settlement marks a huge step forward in our fight to bring justice to Madison County. Without a doubt, our county has been devastatingly impacted by the horrific effects of the drug epidemic. As one of the first counties to join the class action opioid lawsuit, we sent a loud and clear message to some of the largest players in the prescription drug distribution ring that we will not allow those actions to go unchecked,” Taylor said.

“During my time in office, I have shouted from the rooftop that the drug epidemic has been the root of so many of issues in Madison County: our detention center overcrowding, the impact on our first responders, demand on our health care system, the exhaustion of our social service providers, and the impact on our workforce, to name a few…I will work tirelessly to ensure Madison County gets its fair share of the settlement funds,” Taylor concluded.

The three companies released a joint statement Wednesday: “While the companies strongly dispute the allegations at issue in the trial, they believe this resolution will allow the companies to focus their attention and resources on the safe and secure delivery of medications and therapies while delivering meaningful relief to affected communities, and will also support efforts to achieve a broad resolution,” they said, in part.
Johnson & Johnson released a statement saying it would contribute $5 billion to the settlement, depending on the number of state and local governments that decide to opt into the agreement.
“We recognize the opioid crisis is a tremendously complex public health issue, and we have deep sympathy for everyone affected,” said Michael Ullmann, Johnson & Johnson’s executive vice president and general counsel. “This settlement will directly support state and local efforts to make meaningful progress in addressing the opioid crisis in the United States.”
A total of 14 states — New York, California, Colorado, Connecticut, Delaware, Florida, Georgia, Louisiana, Massachusetts, North Carolina, Ohio, Pennsylvania, Tennessee and Texas — were involved in reaching the proposed settlement agreement, according to the New York release.
Cases against Mallinckrodt and Rochester Drug Cooperative will move forward separately through US bankruptcy court.
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.

Funding Overview:

  • The three distributors collectively will pay up to $21 billion over 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.
  • 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 agreement among the states using a formula that takes into account the impact of the crisis on the state – 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.

Injunctive Relief Overview:

The 10-year agreement will result in court orders requiring Cardinal, McKesson, and AmerisourceBergen 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 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 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.

Tragically, just last year, U.S. opioid overdose deaths rose to a record 93,000, a nearly 30 percent increase over the prior year. Provisional data from the Centers for Disease Control shows that Kentucky’s drug overdose deaths increased by more than 50 percent in 2020.