Most U.S. local governments opt to join $26 billion opioid settlement

[January 27, 2022]  By Nate Raymond

(Reuters) - U.S. cities and counties have embraced a proposed settlement worth up to $26 billion resolving lawsuits alleging three large drug distributors and drugmaker Johnson & Johnson fueled the U.S. opioid epidemic, lawyers behind the deal said on Wednesday, increasing the odds that it will move forward.

About 90% of local governments nationwide that were eligible to participate in the settlement with McKesson Corp, AmerisourceBergen Corp, Cardinal Health Inc and J&J had opted to do so by a Wednesday deadline, said Peter Mougey, a plaintiffs' lawyer involved in the negotiations.

Those municipalities and counties are located in 45 states and several territories that had earlier agreed to settle with the three largest U.S. drug distributors after the proposed settlement was announced in July.

Forty-four states will settle with J&J. New Hampshire settled with the distributors but is still suing J&J for billions of dollars. It is one of five states that declined to settle with all or some of the companies.

"To get 6,000 cities and counties to agree on anything at the 90% level in 90 days is unprecedented," Mougey said. "It demonstrates the strength and power of this settlement."
 

In California, over 400 cities and counties, or 97%, joined, putting the most populous state a step closer to receiving more than $2 billion from the settlement and "closing this dark chapter," California Attorney General Rob Bonta said.

J&J in a statement said it is evaluating the level of participation by eligible local governments. The distributors did not respond to requests for comment.

The Johnson & Johnson logo is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 29, 2019. REUTERS/Brendan McDermid

The deal aims to resolve thousands of lawsuits by state and local governments and future cases they could bring seeking to hold the companies responsible for an opioid abuse crisis that has led to hundreds of thousands of overdose deaths.

The distributors agreed to pay up to $21 billion, while J&J agreed to pay up to $5 billion. The money is largely intended to fund treatment and other programs to address the health crisis.

How much the companies ultimately pay depends on state and local government participation. About $10.7 billion was tied to local government participation.

The companies have until Feb. 25 to decide whether to proceed with the deal.

Mougey, a partner at the law firm Levin Papantonio, said that by mid-Wednesday, 3,010 local governments pursuing lawsuits against the distributors agreed to settle, along with 3,405 with populations of over 10,000 that had not filed a lawsuit.

He said 3,038 local governments that sued J&J have joined the deal along with 3,324 non-litigating ones.

(Reporting by Nate Raymond in Boston, Editing by Alexia Garamfalvi and Bill Berkrot)

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