$260 Million Opioid Settlement Reached at Last Minute With Big Drug Companies

CLEVELAND — The three major drug distributors and an opioid manufacturer have reached a settlement worth $260 million to avoid the landmark first federal opioid trial that was set to begin here Monday.

Judge Dan A. Polster of the Northern District of Ohio announced from the bench Monday morning that the deal was struck around 1 a.m.

People familiar with the discussions said a settlement to resolve thousands of other cases brought by local governments and states could be announced later in the day by state attorneys general, but Judge Polster confirmed only the settlement of this first landmark trial.

To settle the case, the drug distributors — McKesson, Cardinal Health and AmerisourceBergen — will pay $215 million to the two Ohio counties that brought the case, people familiar with the agreement said. Teva, the Israel-based manufacturer of generic drugs, is expected to pay $20 million in cash and donate $25 million worth of addiction treatment drugs.

The settlement is the latest in a flurry of agreements reached by drug companies to avoid the landmark federal trial, which was to serve as a test case for legal arguments and evidence in a yearslong attempt to hold the pharmaceutical industry accountable for an epidemic of addiction to opioid painkillers that has killed hundreds of thousands of Americans.

Other companies who already reached a settlement to avoid that trial include Johnson & Johnson; Mallinckrodt Pharmaceuticals, one of the biggest manufacturers of generic opioids; and Purdue Pharma, which has been widely blamed for igniting the opioids crisis with misleading marketing of its drug OxyContin.

The ultimate goal of all companies is to reach a so-called global settlement to resolve all the cases still on the runway in federal and state courts. Purdue reached a tentative settlement to do just that in September — a deal that involves a cash payment of up to $4.5 billion from its owners, members of the Sackler family, and a restructuring of the company into a public entity that would donate all profits to cities, counties and states to compensate for costs associated with the epidemic. But that deal is mired in a long bankruptcy court process.

On Monday morning, the drug distributors, Teva and other companies were still working to reach a global deal worth nearly $50 billion in cash and donated addiction treatments. Talks to do so had reached an impasse on Friday but people familiar with the negotiations said on Monday that they were continuing.

In announcing the settlement of the Ohio trial in court on Monday morning, Judge Polster appeared to nudge the parties to keep working. “I did not encourage the settlement of this trial only,” he said, noting that the parties and negotiators were in the courthouse all day Friday and into the evening to discuss the larger settlement.

He said he understood that the parties will keep trying, adding that he hoped that “we don’t lose the momentum that was created.”

This developing story will be updated.

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