Ohio, drug distributors finalize $808 million opioid settlement

U.S. one dollar banknotes are seen in this illustration taken February 8, 2021. REUTERS/Dado Ruvic/Illustration
  • Ohio finalizes $808 million opioid settlement separate from national deal
  • Drug distributors agree to also pay Ohio's attorneys fees

(Reuters) - Ohio on Thursday finalized an $808 million accord with the three largest U.S. drug distributors resolving claims they fueled the opioid epidemic, guaranteeing the state would be paid regardless of the fate of the proposed $26 billion national settlement.

Ohio Attorney General Dave Yost cited the leverage of an upcoming trial in a case the state filed against the companies to explain why the state could cut a "better deal" with McKesson Corp, AmerisourceBergen Corp and Cardinal Health Inc than what it could get in the national settlement.

That deal calls for the distributors to pay up to $21 billion over 18 years to resolve claims by thousands of states and local governments, while drugmaker Johnson & Johnson would pay up to $5 billion.

J&J is not part of the Ohio-specific deal, and the state is participating in the national settlement with the drugmaker.

But the national settlement is not yet finalized, and the companies could ultimately pay less should it not garner enough state and local support. Eight states besides Ohio have not signed on with the deal with the distributors.

Cities and counties within participating states have through Jan. 2 to join the national settlement, which a group of state attorneys general announced on July 21, and billions of dollars depend on the extent to which they participate.

"We don't even know if there will be a global deal," Yost said. "I remain confident there will be, but there's no way to guarantee that and lots of moving parts."

He said the state's deal was possible because a lawsuit that Ohio filed in 2018 in Madison County Court of Common Pleas was set go to trial imminently. The trial was scheduled to kick off on Monday.

Ohio could begin to receive money as soon as November. Under an agreement the state struck with its local governments last year called OneOhio, 85% of any settlement money will be targeted for local distribution, and the rest will go to the state.

The distributors, who are represented by lawyers at Reed Smith, Williams & Connolly and Covington & Burling, did not immediately respond to a request for comment. The companies announced earlier this month that they were moving forward with the national settlement after enough states signed onto the deal.

More than 3,000 lawsuits have been filed nationally accusing drugmakers of downplaying the addictive risks of their painkillers and distributors and pharmacies of ignoring red flags that the drugs were being diverted for illicit uses.

The companies deny wrongdoing, saying the drugs were approved by the U.S. Food and Drug Administration and that responsibility for ballooning painkiller sales lies with doctors, regulators and others.

Ohio is not alone in cutting a separate settlement with guaranteed payouts thanks to a trial date. The distributors in June ahead of the national proposal being announced struck a $1.1 billion settlement with New York, whose case was already on trial.

The case is State of Ohio v. McKesson Corporation, Madison County Court of Common Pleas, Ohio, No. CVH2018005.

For Ohio: Gregory Utter of Keating Muething & Klekamp, Richard Fields of Fields, Scott Gilbert of Gilbert and Jonathan Blanton of the Ohio Attorney General's Office

For McKesson: Neelum Wadhwani of Williams & Connolly

For AmerisourceBergen: Robert Nicholas of Reed Smith

For Cardinal Health: Mark Lynch of Covington & Burling

Related stories:

Drug companies say enough U.S. states join $26 bln opioid settlement to proceed

New York, drug distributors reach $1.18 bln opioid settlement as national deal looms

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Nate Raymond reports on the federal judiciary and litigation. He can be reached at nate.raymond@thomsonreuters.com.