J&J settles New York opioid suits with $263m payment before US jury trial

Johnson & Johnson (J&J) has agreed to pay $263m to resolve opioid lawsuits filed in New York, settling the cases on the eve of the first US jury trial over claims the company mishandled the highly addictive painkillers.

The settlement resolves complaints brought by New York state attorney-general Letitia James and two Long Island counties that are set to go to trial next week.

In a statement on Saturday, the company said the deal is consistent with a $5bn settlement proposal it made last year to resolve all its opioid liability. The global proposal has yet to be finalised.

“The dollar amount to be received by the state is the prorated share it would have received under the broader agreement in principle, which will be deducted from the all-in settlement amount,” J&J said in the statement.

The company’s Janssen unit stopped making opioid painkillers last year. J&J denied any wrongdoing.

Thousands of lawsuits have been filed by states, cities and counties against opioid makers, drug distributors and pharmacy chains over their roles in fuelling the US opioid epidemic, which has claimed the lives of almost 500,000 Americans over the last 20 years. Most of those claims are pending.

James’s office said in a separate statement the J&J settlement will provide $230m to New York municipalities. That figure does not include legal fees and costs that J&J factored into its final tally, said Fabian Levy, a spokesperson for James.

“While no amount of money will ever compensate for the thousands who lost their lives or became addicted to opioids across our state or provide solace to the countless families torn apart by this crisis, these funds will be used to prevent any future devastation,” James said in the release.

Pending claims

More than half-a-dozen opioid manufacturers — including Teva Pharmaceutical Industries, distributors such as McKesson and pharmacy chain Walgreens Boots Alliance — still face New York’s claims they wrongfully reaped billions of dollars peddling the painkillers by illegally marketing them or turning a blind eye to suspiciously large orders.

Opening arguments in those cases are slated to start on Tuesday in Central Islip, New York.

McKesson and the two other distributors have proposed to pay $21bn to settle all the opioid suits filed against them by state and local governments.

The J&J deal does not affect a current California non-jury trial in which the company is among a group of opioid makers accused of illegally marketing opioids. The trial is expected to last at least another month.

Under the terms of J&J’s New York deal, the drugmaker will hand over $30m as a first payment tied to the settlement once New York governor Andrew Cuomo signs a so-called “lock box” bill into law. The legislation is designed to prevent cash derived from opioid settlements in the Long Island trial being mixed into the state’s general fund.

The legislation was prompted by outrage over New York state officials’ decision earlier this year to divert some of a $32m settlement reached with consulting firm McKinsey over its work for opioid companies. Only $11m was designated to pay for drug-treatment programmes in the state’s prisons.

Once the lock box is in place, “New York would be eligible to receive more than half of total payments, or more than $130m, as soon as February 2022,” James said.

Meanwhile, Walmart, CVS Health and Rite Aid persuaded Judge Jerry Garguilo earlier this week to remove them from the Long Island trial. The claims against the pharmacy providers by the state and counties will be pursued separately.

Bloomberg News. More stories like this are available on bloomberg.com