By Nate Raymond and Shanti S Nair
(Reuters) – Five drugmakers and distributors are offering $22 billion in cash as well as drugs and services they value at $28 billion to resolve lawsuits alleging the industry fuelled the U.S. opioid crisis, two sources familiar with the matter said on Wednesday.
The drug industry faces roughly 2,600 lawsuits brought by state and local governments, hospitals and other entities seeking to hold drugmakers and distributors responsible for the toll of opioid abuse. Local governments seek funds to cover costs of services in their communities.
Distributors McKesson Corp, AmerisourceBergen Corp and Cardinal Health have offered to pay $18 billion in cash over 18 years, while drugmaker Johnson & Johnson would pay $4 billion in cash, two people familiar with the matter told Reuters.
Teva Pharmaceutical Industries Ltd has offered to give away medications it values at $15 billion as part of the deal and provide distribution services it values in the billions, one of the people said.
Both said that Teva’s proposed agreement would run over 10 years and had a total estimated value of around $28 billion. However, it is not clear how the valuation was reached, and one source said some states are asking whether Teva should pay cash as well.
The negotiations are being led by the attorneys general for Texas, Tennessee, North Carolina and Pennsylvania, one person said.
Teva and the three distributors are all defendants in a landmark trial set to begin in federal court in Cleveland, Ohio, on Monday. U.S. District Judge Dan Polster, who has long pushed for a global settlement of the litigation, will preside over the trial.
The distributors, accused of failing to halt and report suspicious drug orders, are pushing for a settlement to be agreed to before the trial begins on Monday, one source said. The second source added that a sticking point was compensation for lawyers who typically are paid a percentage of settlements and represent many of the state and local plaintiffs.
The sources cautioned that there was no guarantee a deal would be struck. One source said lawyers for the thousands of cities and counties with cases pending in federal court have not yet agreed to back the proposal the states are negotiating.
In a joint statement late on Wednesday, the lead attorneys for the cities and counties pursuing federal lawsuits – Joe Rice, Paul Farrell and Paul Hanly – called media reports that they were tentatively supporting the settlement proposal “inaccurate.”
“We await the fine print of the settlement framework so that we can work alongside the 2,600 communities we represent to determine the best path forward,” they said.
Jury selection went ahead on Wednesday in anticipation of opening statements on Monday. Other defendants in the trial are Walgreens Boots Alliance Inc and Henry Schein Inc.
Opioid addiction claimed roughly 400,000 lives in the United States from 1999 to 2017, according to the U.S. Centers for Disease Control and Prevention.
The companies did not respond to requests for comment on Wednesday. J&J had said on Tuesday it was open to a settlement.
(Reporting by Tamara Mathias in Bengaluru and Nate Raymond in Boston; Additional reporting by Ann Maria Shibu in Bengaluru; Editing by Cynthia Osterman and Muralikumar Anantharaman)