The long, winding road to settling the opioid litigation

As I wrote "The United States of Opioids" in 2018, I faced a challenge in what to say about the opioid litigation. The explosion of lawsuits against opioid manufacturers and distributors (as well as other parties, such as national pharmacies) had been well underway since 2017, when the National Prescription Opiate Litigation multi-district litigation began in Cleveland, Ohio before U.S. District Judge Dan Polster. With hundreds of thousands of Americans dead from opioid overdoses and millions more struggling with addiction, there was little question that a massive, mass tort settlement was on the horizon. (I had learned, in writing "From ObamaCare to TrumpCare" several years earlier, the risk in making predictions about events as they are still unfolding.) Big questions surrounded the opioid litigation: Would it be a global resolution? How long would it take to reach a settlement? Would it be the biggest settlement of all time?

As 2020 progresses, my decision to refrain from making specific predictions has been validated, as settlement talks have failed to produce results to date. At the same time, settlement efforts have afforded us more clarity about how the opioid litigation is likely to play out and how much it will take to settle.

No Global Forum

As a starting point, it is important to note that the "opioid litigation" has been distinct from other mass tort cases in the absence of a centralized forum. While the National Prescription Opiate Litigation encompasses over 2,600 plaintiffs -- mostly cities and counties -- all of the states have elected to pursue their lawsuits in their own state courts. In addition, some cities and counties have elected the same strategy of pursuing opioid-related claims in local state courts, closer to where the harm occurred. (For purposes of full disclosure, I am designated as an expert witness on behalf of plaintiffs in several such state court actions.)

The lack of a consolidated venue has played a role in the slow path to settlement. State attorneys general have been working unsuccessfully since the early fall of 2019 to persuade Judge Polster or the 6th U.S. Circuit Court of Appeals to stay the MDL in order to facilitate a state-led global settlement. At the same time, plaintiff attorneys representing the MDL plaintiff municipalities have continued to press for a seat at the table in negotiating a comprehensive settlement.

Division Among the Plaintiff States

While the states are united in their desire to negotiate a resolution without offering city and county attorneys a seat at the table, the more immediate obstacle to a global settlement has been a political divide among the states. A group of predominantly Republican-led states favor acceptance of a settlement with the three largest drug distributors (McKesson, AmerisourceBergen and Cardinal Health) that, in recent weeks, has been valued at roughly $18 billion (with payment over 18 years a significant component, as well as partial in-kind provision of medications). The $18 billion would settle both and local government claims.

In recent weeks, this recent effort has stalled because a group of 21 predominantly Democratic-led states believe the settlement is too low. According to the Wall Street Journal, these state attorneys general are looking for a settlement, 30-80% higher (in a higher range of $22 to $32 billion) with an accelerated payout timeline.

The fault line appears to be between a desire on one side to get funds sooner to deliver needed resources on the grounds, and concerns on the other about money being left on the table for a crisis that shows no signs of slowing.

While the immediate stalemate relates to a prospective settlement with drug wholesalers, the same lines of division surfaced in late 2019 in the negotiations with Oxycontin manufacturer Purdue Pharma, which filed for bankruptcy in September 2019 after it became clear that Democratic-led states were rejecting a settlement valued at roughly $10 billion that Republican-led states and Purdue had agreed to. The opponents felt the settlement was too low based on profits siphoned out of the company by the Sackler family in recent years, and also wanted acknowledgment of accountability of wrongdoing. New York Attorney General Letitia James, a leader of the opposition to a faster, lower value settlement, filed claims in 2019 seeking to claw back funds distributed in recent years from Purdue Pharma to members of the Sackler family.

These stalemates reflect the challenge that remains ahead in reaching a global consensus. The divide may be slow to resolve in a time when partisan differences feature so prominently in public policy. Republic states have emphasized the profound need in their states to address the ongoing public health crises presented by overdoses and opioid addiction. Meanwhile, Democratic attorneys general have emphasized the undercurrents of public anger in their states towards opioid makers and distributors and the need to bring home a settlement that sends the right message. In addition, they point to memories of settlements where, in retrospect, states got their pockets picked, such as Purdue Pharma's $10 million settlement with West Virginia in 2004 and Kentucky's $23 million settlement with Purdue in 2013. The legacy of these settlements is a sense of pressure not to leave money on the table by allowing defendant simply to take moneys already reserved without tapping into their deeper capacity to pay more out of future operations without negatively affecting their long-term profitability.

Looking Ahead

What will it take to break the logjam? The best prospect to increase pressure appears to be state court trial dates coming later this year, including the State of New York's claims currently scheduled to go to trial in March 2020 and cases later in the year in Ohio, California and Tennessee. Just as the fall 2019 impending trial date in the first MDL trial (Cuyahoga and Summit Counties) forced settlement to avoid the public release of damning evidence and the risk of a large verdict, pressure is likely to mount on opioid distributors to sweeten their settlement offers sufficiently to satisfy the holdout states.

While settlement remains on the horizon, the negotiations to date have provided greater clarity as to the size and shape opioid settlements are likely to take.

No Comprehensive Resolution

First, as the latest settlement efforts reflect, in contrast to past mass tort cases, the opioid litigation is unlikely to have a comprehensive global settlement. This latest standoff relates to a settlement with the three largest opioid distributors, an important subset of the larger group of defendants. Settlements with smaller distributors and drug manufacturers will remain on the horizon, including perhaps the largest single defendant settlement ahead reflected in the Purdue Pharma and Sackler family resolution. Settlements may follow in close succession once significant defendants take the lead, but the settlement framework is likely to proceed piecemeal rather than globally.

Not the Biggest Ever

While it is difficult to forecast the total value of the opioid settlements, it is apparent that the total settlement value of the cases will be significantly smaller than originally expected -- and well below the "Big Tobacco" high water mark which exceeded $200 billion. The three large distributor cases have a defined settlement range that tops out around $32 billion. While still an open question, the Purdue settlement is not expected to reach $20 billion. Johnson & Johnson has reported that it would contribute $4 billion to a global settlement. Even with other defendants' contribution uncertain, it appears unlikely that the global value of opioid settlements with all defendants will reach $100 billion, with the best estimates closer to $80 billion.

Among other things, the differential between opioids and tobacco reflects the relatively lower death rate of opioids, which killed unexpectedly but was a drop in the bucket in comparison to the widespread and long-term tobacco use that killed and sickened much larger numbers of people. Opioids grabbed headlines for shocking, preventable deaths, but are not the public health threat of tobacco. The settlement valuation also reflects the finances of the defendants. In contrast to Big Tobacco, where a handful of large companies drew all of their profits from tobacco sales, most of the opioid defendants had relatively small segments of their businesses focused on opioid production and distribution.

No Long-Term Solutions In Sight

Perhaps the most important issue of which to be cognizant in the opioid settlements is the limited efficacy that any volume of settlement proceeds will provide. The problem is not simply whether the money will be directed appropriately, but that the tools do not yet exist for effective long-term solutions for the opioid crisis.

Instead, the principal focal points where opioid settlement funds are likely to be directed are "after-the-fact" solutions: naloxone, the overdose reversal drug branded as Narcan, which saves lives if administered when people are overdosing but still breathing, and buprenorphine (including brands like Suboxone) used for medication assisted treatment to treat opioid addiction. While the evidence demonstrates that these are valuable resources that are saving lives, they are late stage interventions.

What continues to be absent are long-term solutions for prevention and early intervention of opioid addiction that would reduce the number of people at risk of overdoses and struggling with addiction. Similarly, there are no effective approaches in sight for addressing the underlying drivers of opioid addiction, such as the high incidence of pain suffered by millions of Americans. As a result, the settlement funding is likely to be directed to the equivalent of a "band-aid" while the underlying problems continue unabated or worsening. While funding for research flowing from settlements may help make inroads on this massive challenge, my argument in "The United States of Opioids" is that, in the absence of other option, for now, the overriding "prescription" for addressing the crisis needs to leverage the resources of schools, workplaces, research institutions, civic and faith communities across the country in the real work ahead.

2020 is likely to be a decisive year for opioid litigation settlements. As the current gaps are resolved and settlements take shape, these settlements present an important opportunity to invest in addressing one of the central public health challenges of our era, including the pain and suffering borne by so many. The most important question of all is how much of a difference the proceeds will make. 