Settlement spreads payment out over nearly two decades
OLYMPIA — Attorney General Bob Ferguson today announced that he formally rejected a proposed settlement with opioid distributors McKesson, Cardinal Health and Amerisource Bergen, and Johnson & Johnson. The Attorney General’s Office has been litigating against these companies for years. Trial against McKesson, Cardinal Health and Amerisource Bergen begins in King County Superior Court on September 7. Ferguson’s trial against Johnson & Johnson is scheduled to begin in King County Superior Court in January 2022.
King County Superior Court Judge Michael Scott rejected the opioid distributors’ attempt to delay the trial. He reserved the King County ceremonial courtroom for the trial.
These corporations fueled the opioid epidemic. Ferguson has stated publicly that any resolution must result in real accountability, and provide a transformative amount of money for state and local governments to address the opioid epidemic that continues to devastate Washington families.
The proposed settlement is deficient in numerous ways. The settlement purported to pay Washington and its cities and counties an estimated total of $527.5 million over 18 years if 100 percent of cities and counties join. Ferguson rejected the settlement primarily for the following reasons:
- If all terms and conditions are met, the settlement requires Washington and its 320 cities and counties to share an average of $30 million per year for 18 years. This is not a transformative amount of money, and is not sufficient to address the opioid crisis’ devastation.
- The real value is substantially less than $527.5 million due to the impact of inflation. For example, using The Economist magazine’s “Big Mac index”, 18 years ago a Big Mac cost $2.71. Today, the same burger costs $5.66. Consequently, the estimated real value of the settlement for Washington is just $303.4 million — more than a 40 percent reduction in value because the payments are spread out over nearly two decades.
- To receive the full dollar amount, the settlement requires 100 percent of Washington’s cities and counties to join. Depending on the number of cities or counties opting out, the state and participating municipalities would lose up to 50 percent of the payment.
- Washington receives no guarantee that any settlement funds will be paid anytime soon. If a non-litigating municipality decides not to join the settlement and later files suit, large amounts payable to the state freeze until that case concludes.
- Jurisdictions that have gone to trial against these companies have done far better than this agreement. Washington has a trial scheduled in King County Superior Court on September 7 against the three distributors and January 2022 against Johnson & Johnson. Moreover, a trial provides impacted Washington families the benefit of public accountability that a settlement denies.
“The settlement is, to be blunt, not nearly good enough for Washington,” Ferguson said. “It stretches woefully insufficient funds into small payments over nearly 20 years, to be shared among more than 300 Washington jurisdictions. We are looking forward to walking into a Washington state courtroom to hold these companies accountable for their conduct. Washington families devastated by the opioid epidemic deserve their day in court. We intend to give it to them.”
On multiple occasions, Ferguson publicly stated that he will ask the court to direct any court-ordered payment to be spent on addressing the opioid epidemic. The goal is a transformative change in our state’s response to the crisis. Ferguson will reject any settlement offer that allows the recoveries to be used to backfill general government operations.
The national opioid settlement that Ferguson is rejecting consists of two separate agreements: One involving major opioid distributors McKesson, Cardinal Health and AmerisourceBergen, and a second involving Johnson & Johnson, which manufactured and marketed opioids and an active pharmaceutical agent. The companies are offering tribal nations, many of whom have their own pending litigation, a separate settlement proposal.
For Washington, 45 percent of the money for the opioid distributor settlement and 55 percent of the Johnson & Johnson settlement is contingent upon every county and every city in the state joining the settlement, and releasing any current or future claims, regardless of whether they have already filed a lawsuit. Washington has 39 counties and 281 incorporated cities.
For Washington, the monetary components are as follows. If 100 percent of cities and counties sign on and all other conditions are met:
- McKesson, Cardinal Health and AmerisourceBergen pay $417.9 million over 18 years ($23.2 million per year) which must be shared among all 320 Washington jurisdictions.
- Johnson & Johnson pays $109.6 million over nine years (an average of $12.2 million per year) which must be shared among all Washington jurisdictions.
In total, this recovery equates to payments of $50.2 million per year in years 1-3, $27.9 million per year in years 4-9, and $23.2 million per year in years 10-18 — to be split among all Washington jurisdictions.
Jurisdictions that went to trial have obtained results far better than this settlement. For example, Oklahoma won a $465 million verdict against Johnson & Johnson. That result is more than four times what Johnson & Johnson would pay Washington and all its counties and cities under the proposed settlement. Moreover, money from a court verdict must be paid immediately — not over the course of decades, as proposed in the settlement. If a verdict is not paid immediately, interest is added. There is no interest added to the proposed settlement, despite the protracted time period for payment.
Opioid companies’ conduct devastated Washingtonians
Ferguson filed a lawsuit against the three opioid distributors in March 2019, and Johnson & Johnson in January 2020.
The lawsuit against McKesson, Cardinal Health and AmerisourceBergen asserts the three Fortune 15 companies made billions of dollars feeding the opioid epidemic, shipping huge amounts of oxycodone, fentanyl, hydrocodone and other prescription opioids into the state even when they knew or should have known those drugs were likely to end up in the hands of drug dealers and addicts.
Opioid distributors are legally required to monitor the size and frequency of prescription opioid orders to identify suspicious orders that could be diverted into the illegal drug market. Distributors are required to stop these suspicious shipments and report them to the federal Drug Enforcement Agency (DEA).
Instead, McKesson, Cardinal Health and AmerisourceBergen have faced repeated actions from the DEA for continuously failing to stop and report suspicious opioid shipments, paying hundreds of millions in fines for their failure to follow the rules.
Based on shipping data, a conservative calculation suggests these companies may have shipped more than 250,000 suspicious orders into Washington state between 2006 and 2014. A less conservative calculation puts that number more than 3 ½ times that high, at nearly a million.
Ferguson accuses McKesson, Cardinal Health and AmerisourceBergen of violating the state Consumer Protection Act for filling thousands of suspicious orders in Washington state without adequately identifying them or reporting them. Their actions, Ferguson asserts, helped fuel the opioid epidemic in Washington state.
Johnson & Johnson is one of the largest suppliers of the raw materials used to produce opioid pain medications. The lawsuit accuses the multinational company of playing a key role in driving the entire pharmaceutical industry to vastly expand the use of prescription opioids.
Ferguson also asserts that Johnson & Johnson, along with several of its subsidiaries, fueled the opioid epidemic in Washington state by embarking on a massive deceptive marketing campaign and convincing doctors and the public that their drugs are effective for treating chronic pain and have a low risk of addiction, contrary to overwhelming evidence.
Johnson & Johnson’s actions resulted in the deaths of Washingtonians and devastation to Washington families.
Ferguson’s lawsuits seek civil penalties and an order requiring the companies to pay billions to fix the opioid problem that these companies created. He also asks the court to order all four companies to give up the profits they made in Washington as a result of their illegal conduct.
The opioid epidemic in Washington
Experts estimate it will cost billions of dollars to fix the opioid crisis in Washington.
Prescriptions and sales of opioids in Washington skyrocketed more than 500 percent between 1997 and 2011. In 2011, at the peak of overall sales in Washington, more than 112 million daily doses of all prescription opioids were dispensed in the state — enough for a 16-day supply for every woman, man and child in Washington.
In 2015, there were eight counties with more prescriptions than population, led by Asotin, with nearly 1 ½ prescriptions per person. The other counties were Clallam, Grays Harbor, Columbia, Garfield, Pend Oreille, Lewis and Benton.
In 2008, there were 16 counties with more prescriptions than people.
Between 2006 and 2017, opioid overdoses killed more than 8,000 Washingtonians, more than were killed by car accidents or firearms. The majority of drug overdose deaths in Washington state involve opioids.
Washington’s Attorney General serves the people and the state of Washington. As the state’s largest law firm, the Attorney General’s Office provides legal representation to every state agency, board, and commission in Washington. Additionally, the Office serves the people directly by enforcing consumer protection, civil rights, and environmental protection laws. The Office also prosecutes elder abuse, Medicaid fraud, and handles sexually violent predator cases in 38 of Washington’s 39 counties. Visit www.atg.wa.gov to learn more.
Brionna Aho, Communications Director, (360) 753-2727; Brionna.email@example.com
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