Teva Pharmaceutical and AbbVie’s Allergan are finally on the verge of putting thousands of opioid lawsuits to bed.
The companies this week locked in a combined $6.6 billion in settlements to resolve allegations that they helped fuel the U.S. opioid epidemic by overstating the painkillers’ benefits, downplaying the risk of addiction and failing to maintain controls to prevent opioid misuse. With Teva and Allergan’s agreements finalized, state and local governments will now get a chance to opt in to the deals, Teva explained Tuesday.
Under an agreement floated in July, Teva is on the hook to pay $4.25 billion—a sum that will be paid out over 13 years and includes up to $1.2 billion worth of Teva’s generic version of the overdose reversal drug Narcan. Allergan, for its part, will provide up to $2.37 billion to help state and local efforts to fight opioid addiction and substance use disorder in the U.S.
Critically, the agreement—as announced on Teva’s third-quarter earnings call—settles the opioid liability debate between the two companies. The blockbuster settlement “resolves claims related to the generic prescription opioid business" Allergan sold to Teva in 2016, Allergan said in a release.
Back in 2016, Teva paid roughly $40 billion for Allergan’s generics business—including its generic opioids. Allergan previously claimed that deal shifted opioid liabilities to Teva, while the Israeli-American company disagreed. AbbVie absorbed Allergan back in spring 2020.
The agreement between the two companies was one of the final conditions required for Teva’s multibillion-dollar opioid settlement to go through.
In inking the settlements, neither Teva nor Allergan admitted fault.
Ultimately, the final cost of Teva and Allergan’s settlements will depend on the number of state and local governments that sign on.
“Given the high participation rate in other nationwide opioids settlements—and Teva’s settlements with Texas, Florida, Louisiana, Rhode Island, West Virginia, San Francisco and New York—we remain optimistic that a high participation rate in this nationwide settlement will be achieved,” Teva explained Tuesday.
The settlement comes at an inflection point for Teva, which is eyeing a return to growth by 2027 and recently tapped a new CEO. On the first day of the New Year, former Sandoz helmsman Richard Francis will take the reins from current Teva leader Kåre Schultz, who’s set to retire Dec. 31.