Drug manufacturing giant Johnson & Johnson said it has reached an "agreement in principle" with a committee of state attorneys general for $4 billion to settle all remaining opioid lawsuits that claim the company engaged in wrongful marketing practices leading to the painkiller addiction epidemic in the U.S.
In an Oct. 23 filing with the U.S. Securities and Exchange Commission, J&J said the preliminary agreement was reached Oct. 21, with intentions for the funds to provide aid to communities affected by the epidemic.
The pharmaceutical company did not admit to any wrongdoing, and the settlement would free J&J from future lawsuits filed by states, cities or counties.
The proposed settlement would also make a sizable dent in J&J's reported GAAP net earnings for the third quarter, lowering them to $1.75 billion from $4.83 billion. EPS for the quarter would also be reduced to 66 cents from $1.81.
Besides pharmaceutical companies like J&J, drug distributors have also borne the brunt of states' efforts to quell the opioid epidemic with large lawsuits and settlements.
Moody's Investors Service noted after a settlement in Ohio that distributors like AmerisourceBergen Corp., Cardinal Health Inc. and McKesson Corp. — who settled for $215 million of a $265 million deal — could face higher liability than pharmaceutical companies.
"The [Ohio] settlement, which is credit negative for the companies, is significantly larger in magnitude than prior settlements reached by drug manufacturers with the two counties," Moody's said. "This suggests that distributors' may ultimately bear more liability than drugmakers in any global settlement of opioid-related lawsuits."
One such drug distributor, Reckitt Benckiser Group PLC, settled opioid cases on Oct. 23 with attorneys general from the states of New York, California, Indiana, Ohio, Virginia and Washington for $700 million, according to a statement from New York Attorney General Letitia James.
Reckitt Benckiser has faced litigation claiming it improperly marketed the opioid addiction drug Suboxone. New York's Medicaid program will itself receive almost $72 million of the funds.
The settlement resolves cases pending in Virginia and New Jersey.
"Pharmaceutical companies have a basic duty to ensure that they are properly disclosing and marketing powerful drugs," said Attorney General Letitia James. "Reckitt misled the public about the real impacts of Suboxone and encouraged physicians to wrongly prescribe it while cheating New York out of tens of millions of dollars in the process."