A $100B settlement? Or much less? Opioid payouts a mystery until J&J judge rules

cleveland county courthouse
Wells Fargo analyst David Maris said a settlement in a Cleveland multidistrict litigation could reach up to $100 billion. (Pixabay)

After Johnson & Johnson failed in its latest bid to toss out the opioid suit playing out in an Oklahoma courtroom, the possibility of a settlement continues to grow. For analysts watching the case as a bellwether for other opioid suits, the question is how big the payout could get.

Short answer: Who knows?

Monday, a judge threw out J&J’s final attempt to dismiss the illegal marketing lawsuit it faces in Oklahoma over sales of its opioid products in the state.

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J&J, which prosecutors described as the “kingpin” of the state’s opioid epidemic in their closing arguments last week, argued its portrayal by the state as a public nuisance was invalid and violated its First Amendment rights.

The bench judge and state attorney Brad Beckworth weren’t having it.

"No man or woman has ever laid down their life for this country so that a pharmaceutical company could come out and lie or hook kids on opioids,” Beckworth said.

RELATED: J&J called 'kingpin' of Oklahoma opioid epidemic. Will a judge agree?

With the possibility of a settlement or trial loss on the horizon, analysts are closely watching the J&J case as an indicator of what could happen in other opioid lawsuits, including a massive multidistrict litigation involving more than 1,600 cities and counties.

That case is no joke: The drugmakers, distributors and manufacturers involved could be liable for up to $100 billion, according to Wells Fargo analyst David Maris.

After an interview with a Yale law professor, Maris said a settlement was becoming increasingly likely as the judge in the case seeks a neat resolution to the sprawling and complicated claims. The professor told Maris a settlement would likely hit opioid manufacturers—and distributors and retailers, too.

“(The professor) stated that a $100B+ master settlement is in the realm of possibility and could ultimately result in company bankruptcies if they cannot meet the obligations,” Maris said in a note to investors last week.

RELATED: Ditch the opioid 'negotiating class' proposal, experts say. State attorneys general are better suited to reach a deal

While it’s still unclear how a settlement of that type would work, prosecutors have floated the idea of a novel “negotiating class” for plaintiffs in which counties and cities could opt in and vote on a single negotiated settlement.

However, two former chief prosecutors in Connecticut—Attorney General George Jepsen and Deputy Attorney General Perry Zinn Rowthorn—argued in an op-ed last week that the proposed framework could provide outsized power to small municipalities and require plaintiffs to opt in without knowing a proposed settlement amount.

RELATED: 3 drugmakers dominated opioid supplies as 76B pills flooded the U.S.: report

A nine-figure settlement could mean big payouts from drugmakers named in the suit, but at least one analyst is projecting more modest settlements for four companies—Mylan, Teva, Endo and Amneal: $8.5 billion combined.

SVB Leerink analyst Ami Fadia said Monday that Endo, Teva and Amneal could pay around $4 billion, $2.5 billion and $1.2 billion, respectively, for their liability in a range of opioid suits. While Fadia said projecting an exact settlement is “almost impossible at this point,” those three payouts would rank among some of the largest ever levied against a drugmaker in federal court.

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