Drug industry faces ‘tidal wave’ of litigation over opioid crisis – Financial Times
Companies that make or distribute opioid painkillers are facing a “tidal wave” of litigation as US officials seek to raise funds to fight the country’s addiction epidemic and punish those they accuse of fuelling the crisis.
The number of government officials launching legal action against drugmakers and wholesalers has soared in the past year in what some lawyers see as a harbinger of a settlement that could echo the more than $200bn extracted from the tobacco industry in 1998.
At least 30 states, cities and counties have either filed lawsuits or are formally recruiting lawyers using a process that tends to prelude full-blown legal action, according to a Financial Times analysis.
The snowballing litigation comes as President Donald Trump has pledged to officially declare the opioid crisis a national emergency in a move that would allow Washington to direct funds to affected communities.
In 2015, 33,000 Americans died after overdosing on opioids such as heroin and fentanyl — a large proportion of whom ended up becoming addicted to the illegal drugs after first abusing prescription painkillers. Recent government figures suggest the total for 2016 could be even higher.
The barrage of legal action tends to target manufacturers, distributors or pharmacy chains — or companies from all three sectors. Those most commonly named as defendants include drugmakers such as Purdue Pharmaceuticals, Johnson & Johnson, Allergan and Teva; distributors such as McKesson, AmerisourceBergen and Cardinal Health; and drugstore operators such as Walgreens and CVS.
In the majority of cases, the lawsuits argue that manufacturers used aggressive sales tactics to boost revenues from the drugs while downplaying the risks, or that wholesalers and pharmacies did too little to identify large numbers of pills that were being diverted to black market dealers.
“It’s a tidal wave,” said Jodi Avergun, a lawyer at Cadwalader, Wickersham & Taft. “If I were an executive, I would be asking how many more of these are there going to be. At every level of government in almost every state there is a potential plaintiff.”
This week, the state of New Hampshire joined Ohio and Oklahoma in filing a lawsuit, which in its case was directed at Purdue, the privately held group that is the biggest maker of opioid medications.
The list of attorneys-general pursuing companies that have profited from opioids is expected to grow, after three sent out a tender document known as a “request for proposals”, which invites law firms to bid for contracts to manage the litigation.
The District of Columbia is offering law firms up to $45m in fees to support an investigation and possible litigation against distributors and “other potentially liable parties” like drugmakers, according to a copy of a document seen by the FT.
Any fees would be subtracted from a successful settlement. Final bids are due on Tuesday.
“The District and its residents have expended millions of dollars combating the opioid epidemic, the crime related to it, and drug treatment and rehabilitation,” the document says. “The Office of the Attorney General has initiated an investigation into these practices and will determine whether litigation should be brought to protect district residents and the public interest.”
A spokesperson for the DC attorney-general said the contract was for “investigating and potentially litigating against distributors, with an option to expand to manufacturers”.
Attorneys-general in Kentucky and Delaware have sent out similar requests to lawyers, while last week a county in Oregon launched its own lawsuit.
Ms Avergun, chair of Cadwalader’s white collar defence group, said many officials were hoping to use settlement funds to pay for treatment centres and extra police to cope with the crisis, adding: “The costs of drug treatment are astronomical and have threatened to bankrupt a lot of counties.”
Most of the litigation is being led by firms on a so-called contingent fee basis, she pointed out, meaning lawyers will only be paid if the lawsuits result in a settlement — a structure that insulates officials from the financial risk of losing in court.
Ms Avergun said she put the odds of the litigation snowballing into the kind of “global settlement” agreed with Big Tobacco at “more than 50/50”.
Richard Ausness, a professor at the Kentucky College of Law, said: “Once you get a critical mass, everyone says, ‘hey there’s money on the table that we’re not going to get if we don’t get stuck in’ — particularly when it doesn’t cost politicians anything.”
Purdue, J&J, Cardinal Health and AmerisourceBergen said either they denied the allegations or that they intended to defend themselves vigorously, while also expressing willingness to help tackle the crisis. Allergan said its two branded opioids accounted for less than 0.1 per cent of total prescriptions and had not been promoted since at least 2012.
Teva said it was “committed to the appropriate promotion and use of opioids”. McKesson said it did not “manufacture, prescribe or dispense opioids” but was “doing everything” it could “to help address this crisis”.
CVS said it had complied with all appropriate laws and was “dedicated to reducing prescription drug abuse”. Walgreens declined to comment.