Last month, 3 major drug distributors agreed to pay $300 million in a class action settlement, answering for each company’s role in fueling the US opioid epidemic. Despite not admitting wrongdoing, the companies are expected to facilitate the resolution upon judge’s approval, with McKesson, Cardinal Health, and Cencora taking responsibility for 38.1%, 30.9%, and 31% of the total $300 million lawsuit, respectively, Reuters reported.1
According to a previous Reuters article, the recent $300 million lawsuit will be added on top of a 2022 agreement to settle $26 billion between multiple drug distributors and state and local governments. Along with McKesson, Cardinal Health, and Cencora, this settlement also included Johnson & Johnson.2
With several lawsuits being settled as of late, federal and local governments are beginning to allocate responsibility to specific parties—mainly drug distributors—for the ongoing opioid epidemic in the US.
Key Takeaways
- McKesson, Cardinal Health, and Cencora agreed to pay $300 million in a class action settlement, without admitting wrongdoing, for their roles in fueling the US opioid epidemic.
- More specifically, companies are answering for overprescribing and overmarketing opioid medications, as well as leading beneficiaries to suffering variations of opioid use disorder.
- This lawsuit comes just 2 years after the same 3 companies, plus Johnson & Johnson, agreed to pay states and local governments $26 billion between the 4 parties.
Regarding the August 2024 settlement, litigation support consultant Meredith Rosenthal, MD, Health and Policy Professor at Harvard University, played a significant role in identifying the reasoning behind drug distributors’ responsibility for issues fueling the epidemic. She further explained how distributors forced health benefit payors to back their patients into a corner regarding opioid prescriptions.
“A fixed settlement to compensate [third party payors (TPPs)] for overcharges related to opioid marketing should be allocated in a way that reflects the relative burden of opioid overuse borne by individual TPPs. This relative burden can be approximated by comparison of TPPs’ estimated spending on opioids and the health care sequelae of opioid addiction (e.g., emergency department visits for opioid overdose),” said Rosenthal, according to the court filing.3
Unlike the 2022 agreement, resolved between distributors and local governments, this settlement involved the 3 drug distributors’ involvement with health insurers and benefit plans. Plaintiff lawyer Paul Geller further elaborated on how funds were “largely paid for the overprescribed and overmarketed pills and for the treatment required when their plan beneficiaries inevitably suffered opioid use disorder.”1
As the opioid epidemic within the US has been gradually exacerbated over the last 30 years, settlements between states and local governments—and now health insurers—with drug distributors have been one of the few moves in a positive direction to stunting the growth of the epidemic.
READ MORE: City of Boston Sues Major PBMs Over Role in Opioid Crisis
“In the 1990s, the intensified marketing of newly reformulated prescription opioid medications (e.g., OxyContin) and an influential pain advocacy campaign that encouraged greater pain management led to a precipitous rise in opioid use in the United States. Research from the Centers for Disease Control and Prevention (CDC) shows that prescription opioid sales in the United States quadrupled from 1999 to 2010. At the same time, opioid misuse and opioid-involved overdose deaths increased,” according to the Congressional Research Service.4
From 1999 to 2020, over 565,000 Americans died from opioid overdoses, and that number has since increased in the past 4 years. As opioids, both natural and synthetic, began flooding the market for the treatment of pain, fingers have been pointed to all of the major entities within the drug supply chain for this occurrence, including drugmakers, distributors, pharmacies, and doctors. In turn, in the more recent years of the epidemic, these entities have faced around $50 billion in lawsuit settlements.4,5
The most recent settlement between health insurers and McKesson, Cencora, and Cardinal Health has been deliberated upon since 2022, with the final decision coming just at the end of last month.4
While litigation continues and major players in the opioid epidemic are beginning to answer for their alleged wrongdoing, there remains a lengthy road ahead before the opioid epidemic is no longer a public health crisis within the US. And while the entire situation cannot be abated with litigation alone, it is an important step to collecting and allocating funds within local governments to assist patients who have been affected by opioid misuse.
“In addition to receiving federal funds, state, local, and tribal governments have sought to support their prevention and treatment efforts by pursuing a substantial number of civil lawsuits against entities along the prescription opioid supply chain. These cases have begun to result in substantial settlements that require portions of the settlement fund to be used for abatement strategies, such as increasing access to MAT and naloxone,” concluded the Congressional Research Service.4
READ MORE: CVS PBM to Pay $45 Million in Rebates to State of Illinois
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References
3. National Prescription Opiate Litigation. 1:17-md-2804 (United States District Court Northern District of Ohio Eastern Division 2024). August 30, 2024. Accessed September 4, 2024. https://fingfx.thomsonreuters.com/gfx/legaldocs/gdpzmlzzqvw/08302024opioid.pdf
4. Duff JH, Shen WW, Rosen LW, et al. The Opioid Crisis in the United States: A Brief History. Congressional Research Service; November 11, 2022. Accessed September 4, 2024. https://crsreports.congress.gov/product/pdf/IF/IF12260
