National opioid settlement won’t be 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 these 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, including making or selling an array of medicines, vitamins and medical devices as well as drugstore products.
They include health and consumer products giant
Johnson & Johnson; some of the world’s largest makers of generic medicines; huge drug distributors McKesson, Amerisource Bergen and Cardinal Health; and the national pharmacy chains, including Walgreens, CVS and Walmart. Opioids usually represent only a sliver of their business. Even plaintiffs’ lawyers say it may not be in the public interest to squeeze the companies too tightly.
Lawyers and economists also say that pharma will most likely pay less than Big Tobacco because, by one crude measure, its damage is smaller: Prescription painkillers have claimed far fewer lives than cigarettes.
According to the Centers for Disease Control and Prevention, about 218,000 people died from overdoses related to prescription opioids from 1999 through 2017. But each year, more than 480,000 people die from causes directly related to smoking or secondhand smoke.
Another challenge: apportioning blame. For cigarettes, that issue was relatively straightforward. The tobacco companies were almost entirely responsible for the manufacture, marketing, distribution and product placement of cigarettes. While the government could ban sales to minors, it had little authority to regulate marketing and distribution of tobacco until 2009.
So far, only two offers for a nationwide settlement have been disclosed. One offer, from Purdue Pharma, maker of OxyContin, is valued by the company at about $10 billion, including at least $3 billion in cash from the members of the Sackler family, the owners. It has been tentatively accepted by about two dozen states and thousands of local governments but is far from final.
Another proposal, ostensibly worth $48 billion, is from the three drug distributors and two manufacturers (Teva and Johnson & Johnson), much of it to be paid over 18 years. But nearly half that figure is an inkind assessment of the value of addiction treatment drugs and distribution services that the companies pledge to provide.
Twenty-one states and lawyers negotiating for cities and towns have called the proposal too skimpy, with too long a timetable for communities that need help immediately. Last week, they called for further talks.