With a federal jury already sworn in and opening arguments in the high-stakes trial scheduled for Monday, U.S. District Judge Dan Aaron Polster has summoned all sides to his courtroom. His involvement could signal that negotiations are progressing to a potential settlement that could avert a two-month trial. That proceeding seeks billions of dollars from six drug companies to pay for the fallout of the worst drug crisis in U.S. history.
CEOs of the major companies are expected be present — an unusual circumstance for a settlement conference. Attorneys general of North Carolina, Pennsylvania, Texas and Tennessee also will participate, along with the lead lawyers for the counties, cities, Native American tribes and other groups that have filed suit against the drug companies.
They will discuss a settlement currently valued at about $50 billion in cash and drug treatment medications, according to those close to the negotiations who spoke on the condition of anonymity because the talks are at a critical stage.
All sides have much to gain from a negotiated settlement, which Polster has encouraged for nearly two years. For states, cities and counties, a deal would speed badly needed cash and medication to communities that have been paying for drug treatment, emergency services and law enforcement related to the crisis. An agreement would avert years of delays connected to multiple trials and subsequent appeals.
The companies would end thousands of lawsuits that are costing them millions of dollars in legal fees and continuous negative publicity. Trials in open court also could bring out additional damaging information about how they handled narcotics.
But the deal has yet to win approval of the lawyers in charge of the city and county lawsuits. “We await the fine print of the settlement framework so that we can work alongside the 2,600 communities we represent to determine the best path forward,” they said in a statement released Wednesday night. “Our priority when assessing settlement proposals is to ensure they will provide urgently-needed relief in the near term and that these resources will be directed exclusively toward efforts to abate the opioid epidemic.”
Another snag may be fees for those private lawyers who would claim a substantial portion of any settlement after years of working on the lawsuits.
On Thursday, Polster swore in a jury of six men and six women after a selection process that took little more than a day. Opening arguments are scheduled for Monday.
The companies involved in the settlement talks include mammoth drug distributors McKesson, Cardinal Health and AmerisourceBergen, Israel-based drug manufacturer Teva Pharmaceuticals and Walgreens. All five are defendants in the upcoming trial, in which two Ohio counties are seeking more than $8 billion dollars to cover their costs.
It was not clear Thursday whether the sixth defendant, Henry Schein Medical, which distributed a small number of opioids to one Ohio county, is participating in the talks.
Under the current settlement proposal, the distributors would pay $18 billion over 18 years, to be divided among states, counties, cities and other groups, according to people familiar with the discussions. They appear to have enough resources to cover such a deal. Documents filed with the Securities and Exchange Commission show that McKesson has about $1.95 billion in cash and cash equivalents on hand. Cardinal has $2.5 billion, and AmerisourceBergen has $3 billion.
Federal laws and regulations make wholesale distributors — the middlemen between manufacturers and dispensers — among the gatekeepers of narcotic flow in the United States. They are responsible for identifying suspicious orders of painkillers, stopping the shipments and alerting authorities.
Teva would contribute nearly all of its portion of the settlement in the form of free anti-addiction drugs and other drugs, as well as a small sum, considerably less than $1 billion, according to a person with knowledge of the discussions.
A critical element is the participation of Johnson & Johnson, which would pay about $4 billion to resolve the remaining lawsuits against it, according to two people familiar with the negotiations. Discussions have centered on the company paying most — and maybe all — of that money within two years. The health-care giant settled earlier this month with the Ohio counties for $20.4 million.
Representing the states Friday will be two Republican and two Democratic attorneys general, people familiar with the matter said. The Republicans are Herbert Slatery of Tennessee and Ken Paxton of Texas; the Democrats are Josh Stein of North Carolina and Josh Shapiro of Pennsylvania. Spokespeople for Paxton, Stein and Shapiro declined to comment. Slatery did not immediately respond to a request for comment.
Lawyers for the local plaintiffs include Joseph F. Rice, Paul T. Farrell Jr., Paul J. Hanly Jr. and Troy Rafferty.
The drug industry has faced a deluge of lawsuits from governments and other groups that contend that the companies are responsible for the worst drug crisis in U.S. history. During the opioid epidemic, about 200,000 people have died of overdoses of prescription narcotics, and another 200,000 have succumbed to overdoses of illicit street drugs, mainly heroin and fentanyl, over the past two decades.
The drug companies deny the charges, saying they have delivered legal, highly regulated medication to pain patients and are not responsible for its diversion to the black market.
Lawsuits filed by cities, counties, Native American tribes and other groups nationwide have been consolidated in a mammoth multidistrict litigation in Polster’s courtroom. The Cuyahoga County and Summit County cases are part of bellwether trial designed to determine how both sides might fare in the litigation.
Separately, nearly every state has sued a wide variety of drug companies in state courts. The drug companies working on a mass settlement have generally insisted that it cover both the state and federal lawsuits.
Higham, Horwitz and Davis reported from Washington.