Johnson & Johnson and the United States’ three largest drug distributors have agreed to a $26 billion settlement to resolve thousands of opioid lawsuits. On Wednesday, seven states unveiled the deal which will help them fund measures to combat the opioid epidemic.
The agreement—by J&J, AmerisourceBergen, Cardinal Health and McKesson—has been under negotiation for more than two years. States will have 30 days and local jurisdictions will have 150 days to enlist in the pact.
J&J will fork over $5 billion over nine years, with the bulk of the payments coming over the first three years. The three distributors are on the hook for the remaining $21 billion, which will be paid over 18 years.
“We collectively took on some of the most powerful companies in the world and today we delivered something,” Pennsylvania attorney general Josh Shapiro said in a conference call with reporters.
Opioid overdoses claimed 5,172 lives in his state in 2020, or “14 people every single day who have succumbed to this crisis," Shapiro added.
The funds will be doled out to states based on a formula that takes into account population, the number of overdose deaths and residents who are in recovery programs. The money will be dedicated to the treatment, recovery, education and prevention of opioid abuse.
Money will be available to states by April of next year. Of the $26 billion total, $2.1 billion has been earmarked for attorney fees.
Further, the agreement specifies a 10-year court order that J&J will not sell or lobby for opioids, fund grants to third parties for promoting opioids or share clinical trial data under the Yale University open data access project. The company stopped producing and selling opioids last year and halted marketing of the powerful painkillers in 2016.
“This settlement puts in place controls that will go a long way to making sure this never happens again,” Shapiro said.
The opioid crisis has killed approximately 500,000 Americans over the last two decades, CDC data show. Drugmakers and distributors face more than 3,400 lawsuits alleging they’ve played a role in creating the crisis.
The settlement coincides with a high-profile case, currently underway in New York, which is the first of its kind as it involves drugmakers, distributors and suppliers and is set to go to a jury.
Late last month, Johnson & Johnson agreed to pay $230 million to escape the New York lawsuit, claiming the settlement was “not an admission of liability or wrongdoing by the company.” On Tuesday, AmerisourceBergen, Cardinal Health and McKesson agreed to a $1.179 billion settlement to settle the case, leaving AbbVie, Teva and Endo as the lone defendants.
The $26 billion settlement is believed to be the second largest in history. In 1998, tobacco manufacturers agreed to pay 46 states more than $200 billion over 25 years.
In addition to Shapiro, attorney generals from six other states jointly announced Wednesday’s resolution. It is uncertain how many states will sign on, though North Carolina attorney general Josh Stein expects that the settlement would draw “well north of 40” state participants.
The Plaintiffs' Executive Committee, an organization representing more than 3,000 who have brought opioid lawsuits, endorsed the settlement and urged states to enlist.
"While today’s announcement suggests a milestone agreement, important work remains to be done, and the process will take some time," the PEC wrote in a release. "It is important to stress that this initial participation decision by litigating subdivisions is step two in this process. We do not move forward unless the settling defendants find the volume of participation is significant in their sole opinion to warrant concluding the settlement."