FEATURE Review by Erich Eiselt
Missouri Municipalities And The Opioid Settlement The History
The Settlement
On June 21, 2017, former Missouri Attorney General Josh Hawley filed suit in St. Louis City Circuit Court against three opioid manufacturers—Endo, J&J/Janssen, and Purdue Pharma.1 His complaint cited the defendants’ fraud, misrepresentation, and other violations of the Missouri Merchandising Practices Act (RSMo Ch. 407) in selling and marketing opioids. 2 That lawsuit, only the third opioid case brought by a state at the time,3 would become part of a massive nationwide effort, launched by states, tribes, third-party payors, hospitals, Neonatal Abstinence Syndrome (NAS) babies, and more than 3,300 cities and counties, to hold opioid makers, distributors, and dispensers accountable. One year later, in August 2018, Jefferson County, joined by nine other Missouri counties and one city, filed its opioid complaint in the same St. Louis court. 4 The consortium of plaintiffs named 49 defendants across the opioid supply chain, including manufacturers, distributors, dispensers, pharmacy benefits managers, pill mills and others. Eventually, dozens of Missouri localities would become opioid plaintiffs. The cases took differing trajectories as defendants sought removal on diversity, federal officer, and federal question grounds. The AG, protected when exercising his prerogative to bring a parens patriae action, remained in state court in St. Louis. The county/city cases
As a group of major opioid cases moved to trial this summer,10 a pivotal breakthrough finally materialized: on July 21, 2021, AGs from 14 states announced that the “Big Three” pharmaceutical distributors (Amerisource Bergin, McKesson, and Cardinal Health), and Johnson & Johnson had proposed a $26 billion settlement agreement (Settlement Agreement). 11 Beyond exacting major payouts from the defendants, the Settlement Agreement requires significant behavioral changes.12 The Big Three, that control the vast majority of America’s pharmaceutical distribution, will reduce competitive secrecy, and establish a common clearinghouse tracking every opioid shipment.13 They will then be required to check that database before making an opioid delivery. If a recipient’s order appears extraordinarily large or suggests diversion, the distributor must notify state and federal authorities and withhold shipment.14 In a related agreement, J&J will completely cease producing opioids.15 The $26 billion figure is a maximum. The Big Three portion, $21 billion, is payable over 18 years,16 costing them much less in terms of present value, even before they apply any potential tax benefits arising from such payments. More than $2 billion goes to legal fees. The payout declines significantly if not all states and their subdivisions accept, potentially reducing the total
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theReview November/December 2021
were rapidly removed to federal court in the Eastern District of Missouri, and then to In re National Prescription Opiate Multi-District Litigation (MDL), the allencompassing MDL before Judge Polster in Ohio’s Northern District.5 Two of those cases were ultimately remanded to Missouri, including Jefferson County’s suit, noteworthy for its focus on the failures of pharmacy benefits managers.6 The rest remained in Cleveland, stayed from further activity. Across the country, some litigations bore early fruit. In 2019, Oklahoma obtained a $270 million settlement from Purdue, followed by a $465 million judgment against J&J. 7 In Ohio, MDL bellwethers Summit and Cuyahoga counties accepted a $260 million settlement from manufacturers and distributors. 8 The prospect of continuing warfare drove opioid makers Purdue and Mallinckrodt to file for bankruptcy, establishing multi-billion dollar estates that could be distributed to various classes of creditors including local government plaintiffs.9 Meanwhile, thousands of actions awaited resolution.
