Payout from settlement not as big as hoped

As talks escalate to settle thousands of opioid-related lawsuits nationwide, a harsh reality is emerging: the money the pharmaceutical industry will pay to compensate ravaged communities will likely be far less than once envisioned.

Lawyers on all sides have been stepping up efforts to reach a national agreement before the start of a New York trial next month. But even plaintiff lawyers now believe the payout from dozens of opioid makers, distributors and retailers is likely to be less than half of what the four Big Tobacco companies agreed to pay more than 20 years ago in a landmark settlement with states over costs associated with millions of smoking-related deaths.

Whatever the final amount, it will certainly fall well short of what public health experts say is needed to heal the long-term effects of the opioid crisis.

The tobacco settlement of 1998 totaled more than $206 billion over 25 years. When pressed to name the dollar figure he was swinging for, Joe Rice, chief negotiator for thousands of cities and counties suing the pharmaceutical industry who was also instrumental in wresting the tobacco settlement, conceded in an interview: “People would say I was crazy if I thought we could get over $100 billion.”

Eric Percher, a senior analyst who follows the litigation for Nephron Research, an independent investment research firm, recently predicted that the total would end up between $75 billion and $85 billion.

Estimates vary wildly over just how much money it would take to finance the treatment and prevention programs, emergency services, law enforcement and other measures needed to fix the problems created by opioids. In October, the federal Council of Economic Advisers said that during the four-year period from 2015 through 2018, the economic toll from opioids was more than $2.5 trillion, including the cost of health care and law enforcement, and estimates of lost productivity.

The idea that some of the biggest U.S. corporations would not be made to cover a substantial portion of the opioid bill defies common sense to some people. But analysts and lawyers said the calculus to reach those settlements is even trickier than it was with the tobacco settlement.

For starters, four cigarette companies produced a single product — one whose dangers were undisputed. But prescription opioids are beneficial for some patients. In addition, the dozens of companies targeted in the opioid lawsuits “do some very good things,” said Rice.