J&J, Teva offer a whopping $48B combined to wrap opioid suits, but not all plaintiffs are on board

Teva
Teva is offering a reported $250 million in cash and $23 billion in drugs to escape thousands of opioid lawsuits it faces. (Teva)

Instead of facing the courtroom in an Ohio bellwether opioid trial, Johnson & Johnson and Teva opted to settle instead. But those deals are just two pieces of a much bigger one in the works: The drugmakers and three distributors are looking to escape all their opioid suits with a settlement valued at $48 billion combined.

The five defendants lodged their support Monday for a global “framework” deal with four state attorneys general and a group of local plaintiffs valued at more than $48 billion. Of that, Teva has offered $250 million in cash and $23 billion in free drugs.

If approved, Teva's deal would become the single largest settlement ever inked by a drugmaker.

Webinar

Striving for Zero in Quality & Manufacturing

Pharmaceutical and medical device manufacturers strive towards a culture of zero – zero hazards, zero defects, and zero waste. This on-demand webinar discusses the role that content management plays in pharmaceutical manufacturing to help companies reach the goal of zero in Quality and Manufacturing.

Under the terms of the proposed settlement, Teva would shell out $250 million in cash over 10 years to “significantly contribute to the care and treatment of people suffering from addiction and assist impacted communities,” the company said in a statement.

Teva would also donate buprenorphine naloxone, an opioid addiction treatment, worth a list value of $23 billion over the next 10 years. The combined $23.25 billion deal far outshoots a similar global opioid offer from Purdue Pharma reportedly valued at up to $12 billion.

J&J, for its part, would pay $4 billion to end the thousands of lawsuits against it. The three distributors involved in the deal include McKesson, Cardinal Health and Amerisource Bergen, all of which settled with Summit and Cuyahoga counties in Ohio as that bellwether trial loomed. 

RELATED: Teva, distributors sidestep Ohio opioid trial with last-minute deal: WSJ

Despite a broad spectrum of support from some analysts—and backing from the AGs and local governments that have so far signed on—the "framework" deal isn't a sure thing. Other plaintiffs, in fact, have expressed their disdain for the agreement. 

Ohio AG Dave Yost, one vocal critic of drugmakers' past opioid settlements said the proposed deal “isn’t a framework, it’s a pile of lumber that’s been dropped on the construction site," according to Reuters.

Despite that pushback, analysts remain tentatively hopeful that the deal could represent an end to the financial uncertainty surrounding the national litigation, particularly for Teva.

"While there appear to be many hurdles left to clear before a global settlement is finalized, our initial take is that the present value impact of the terms laid out in the framework is well within reason" of the initial forecast, SVB Leerink analyst Ami Fadia said in a note to investors Tuesday. 

The one uncertainty, Fadia noted, was whether all the plaintiffs would agree to such a deal, leaving "a lot more wood to chop" before a deal is struck. 

Bernstein analyst Ronny Gal pointed out that Teva's offer put most of the value on donated drugs, potentially freeing the company from bankruptcy or increased debt—a "clear win" in his estimation.

The deal represented a "win-win" for RBC Capital Markets analyst Randall Stanicky, but he preached caution to investors that a significant amount of buy-in was still necessary before a deal could be struck. 

"That does not appear to be there at this point (at least for now)," he wrote.

RELATED: Who joins Purdue on pharma's top 10 settlements list? Merck, GSK and Pfizer, for starters

On Monday, Teva agreed to pay a combined $45 million to wrap up with the two Ohio counties, including $20 million in cash and $25 million worth of buprenorphine naloxone.

A fourth defendant in the county suits—medical supply provider Henry Schein—was dismissed from the suit Monday, leaving Walgreens as the sole defendant remaining.

In settling the bellwether, Teva joined Johnson & Johnson, Endo, Allergan and Mallinckrodt in inking deals for a combined $60 million.

Editor's Note: This story has been updated with more information about the settlement "framework."

Suggested Articles

Imbruvica has enjoyed a nice run in previously untreated CLL over the last few years. But major competition is here in the form of AZ's Calquence.

Pennsylvania's Supreme Court revived thousands of lawsuits alleging the antipsychotic med Risperdal caused males to develop breasts.

In the asthma biologics race, there doesn't appear to be a clear favorite among Xolair, Dupixent, Fasenra and Nucala for a group of pulmonologists.