Pennsylvania would get up to $1 billion in opioid settlement, AG says

Pennsylvania will receive up to $1 billion under a $26 billion opioid settlement deal with Johnson & Johnson and the three major U.S. pharmaceutical distributors, including Conshohocken-based AmerisourceBergen, State Attorney General Josh Shapiro announced Wednesday.

The settlement is meant to help resolve thousands of lawsuits brought by states, counties, Native American tribes, and other groups against companies alleged to have fueled a deadly nationwide opioid epidemic.

“We collectively took on some of the most powerful companies in the world to fight for you,” Shapiro said during a video news conference.

The announcement drew immediate fire from Philadelphia Mayor Jim Kenney and District Attorney Larry Krasner, showing that there’s still work to be done to get local government leaders on board.

Nearly 500,000 people died from overdoses that involved prescription or illicit opioids between 1999 and 2019, according to the U.S. Centers for Disease Control and Prevention. In Pennsylvania, drug overdose deaths climbed 16% last year, to 5,172, according to the CDC.

“These deaths did not have to happen,” Shapiro said. “This epidemic was caused by an army, really manufactured by an army, of pharmaceutical executives and drug distributors who decided that they wanted to pursue their bottom lines over the health and safety and well-being” of Pennsylvanians.

» READ MORE: Opioid overdoses have spiked during the pandemic

The companies involved in the nationwide litigation have generally denied the claims against them, and the agreement announced Wednesday does not include any admission of wrongdoing.

“While the companies strongly dispute the allegations made in these lawsuits, they believe the proposed settlement agreement and settlement process it establishes ... are important steps toward achieving broad resolution of governmental opioid claims and delivering meaningful relief to communities across the United States,” the distributors said in a joint statement.

“We recognize the opioid crisis is a tremendously complex public health issue, and we have deep sympathy for everyone affected,” Johnson & Johnson general counsel Michael Ullmann said in a statement.

Under the terms outlined by Shapiro’s office, the distributors will pay up to $21 billion over 18 years, and Johnson & Johnson will pay up to $5 billion over nine years. The agreement also requires the distributors, which include Ohio-based Cardinal Health and Texas-based McKesson, to establish a clearinghouse so the companies and state regulators can monitor the flow of drugs.

The states have a 30-day window to join the settlement, and participating states will also need to convince counties and local governments to join for it to take full effect. North Carolina Attorney General Josh Stein said Wednesday he expects more than 40 states to sign on to the $26 billion settlement.

The distributors said they will each evaluate whether a “sufficient” number of states have joined the agreement after 30 days. The companies did not specify Wednesday hard and fast numbers on how many states, counties and municipalities have to sign on.

Pennsylvania’s full share of the settlement will depend, in part, on how many municipalities agree to essentially give up current lawsuits against the companies, or rights to sue them in the future.

“We are confident that we’re going to get our local governments to sign on at a rate that will allow us to maximize Pennsylvania’s share and get to that billion dollars,” Shapiro said in an interview.

But in a city that has been hard hit by the opioid epidemic, Mayor Kenney and DA Krasner sharply criticized the settlement proposal Wednesday, and said their offices weren’t included in the negotiations.

“Resources to address this public health crisis are immensely important,” Kenney said in a statement. “However, at first look, the money provided for in the settlement is too little and will be paid over too long a period of time.”

“My immediate, most obvious concern is that it’s a sell-out,” Krasner said of the agreement. Krasner said that he wasn’t shown any signed documents with the terms, and that there “has been zero meaningful effort” by Shapiro’s office to involve his office in settlement discussions.

The city and the district attorney’s office each filed opioid lawsuits against corporate defendants. The suits are pending in state court, along with lawsuits filed by dozens of Pennsylvania municipalities against distributors, drugmakers and pharmacy chains. Those cases are being coordinated through the Delaware County Court of Common Pleas, which designated four of the suits — including Krasner’s — as test cases that would go to trial first. No trial date has been set yet.

“I’m going to have to see a whole lot more very encouraging information than I have right now before I’d have any reason to give up that lawsuit,” Krasner said.

Conshohocken lawyer Joe Cappelli’s firm, Marc J. Bern & Partners, represents nearly two dozen Pennsylvania municipalities in opioid cases. Counties and cities chose to bring their own opioid lawsuits, he said, so they could have some control over any resulting money — unlike with the tobacco litigation of the late 1990s, in which states largely absorbed the settlement funds.

This time around, the idea was that “local leaders know what issues they have to deal with, whether it be treatment, Narcan, drug court” or other types of programs, Cappelli said.

As local officials evaluate settlement terms. “naturally, the dollar amount is important, and also how the dollars are going to be controlled,” he said.

The settlement announcement comes as opioid trials continue to play out against the distributors in West Virginia and several drugmakers in New York. An important hearing is also scheduled Aug. 9 in the bankruptcy case of OxyContin-maker Purdue Pharma.

Earlier this month, Shapiro and other state AGs said they were on board with a proposed $4.5 billion settlement tied to the Purdue bankruptcy. Pennsylvania would received an estimated $225 million under the agreement.