The proposed deal would take Ireland-based Mallinckrodt off the list of defendants facing the two counties in a test case of whether the drug industry should be forced to pay for the prescription opioid epidemic, which has killed more than 200,000 people since 1999.
More than 2,000 counties, cities, Native American tribes and others have sued those companies, seeking compensation for the costs of emergency care, drug treatment, law enforcement and other costs. Their cases have been consolidated before a federal judge in Cleveland.
“Mallinckrodt is pleased we were able to reach a settlement in principle with the counties that made sense for all parties,” Mark Casey, Mallinckrodt’s general counsel, said in a statement. Resolving the two early “bellwether” cases, he added, “gives us the necessary time to continue to work toward a global resolution of the opioid lawsuits.”
Plaintiffs’ lawyers said in a statement that the proposed deal, which still must be approved by the Summit and Cuyahoga county councils, would give the counties “critically needed resources,” as well as “protection in any future insolvency proceeding by Mallinckrodt.”
Frank Gallucci, an attorney for Cuyahoga County in the lawsuit, said the settlement would allow it “to get some dollars earlier than they may get through trial, and start trying to get ahead of the epidemic.”
The Washington Post reported in July that a Mallinckrodt subsidiary, SpecGX, was the single largest manufacturer of the more than 76 billion opioids distributed across the United States between 2006 and 2012. The data came from a Drug Enforcement Administration database that was released after The Post and HD Media, which publishes the Charleston Gazette-Mail in West Virginia, waged a year-long legal battle for access to it.
Endo Pharmaceuticals and Allergan, which made smaller amounts of opioids that were distributed in Summit and Cuyahoga counties, already have settled with those counties.
The proposed deal comes during a difficult period for drug companies, including distributors and retail pharmacy chains, which have become targets of legal action by communities devastated by the opioid crisis.
On Aug. 26, an Oklahoma judge ordered Johnson & Johnson to pay $572 million to that state for its role in fueling the opioid crisis there. Purdue Pharma, the maker of OxyContin, the drug widely blamed for helping to spark the opioid epidemic, is in talks to settle with the 2,000 municipalities in the federal suit and more than 40 states that have filed separate lawsuits, for $10 billion to $12 billion.
Bloomberg reported Thursday that Mallinckrodt was considering bankruptcy because of the liability it faces in the opioid lawsuits, sending its stock price plummeting. Purdue has also warned it could declare bankruptcy if no settlement is reached, a move that could stymie efforts to recoup funds from the company.
In recent days, U.S. District Judge Dan Aaron Polster, who oversees the consolidated federal lawsuit, has ruled against the drug industry defendants on a number of pretrial motions designed to derail the mammoth legal action.
“Judge Polster, in a very well reasoned opinion a week or so ago, denied Mallinckrodt’s motion for summary judgment, to throw the case out against Mallinckrodt,” said Paul J. Hanly Jr., one of the lead plaintiffs’ lawyers.
“We’re pleased that one of the major defendants in this litigation, Mallinckrodt, has taken at least the first step in what may be the journey of a thousand miles to resolve its role in the opioid epidemic,” he added.
In 2017, The Post reported that the DEA and government lawyers pursued Mallinckrodt as the first major manufacturer in a campaign to hold the pharmaceutical industry responsible for the drug crisis. But the effort fell short and the two sides settled for a $35 million payment from Mallinckrodt.