Final payouts could rival the massive tobacco settlements of the 1990s. Such a deal, if reached, could funnel tens of billions of dollars to communities struggling with the opioid addiction crisis, while restoring stability to one of the country's biggest industries.
"There has got to be a comprehensive approach to addressing the national epidemic, and this is a step toward that," said Joe Rice, co-lead council for attorneys who filed the motion, representing hundreds of the communities suing Big Pharma.
He said the framework, which attorneys filed in federal court in Ohio and still needs approval by the court, could help more than 24,000 communities across the U.S. fight the opioid crisis. None of the defendant companies, which are facing a tsunami of litigation stemming from the epidemic, have signed off on the framework yet.
"The defendants don't have a sense of how they get closure, how can they put this issue behind them," Rice said. "So they have asked us for a roadmap."
In all, more than 1,800 lawsuits have been filed so far against drugmakers such as Johnson & Johnson, distributors like McKesson and street-corner pharmacies including CVS and Walmart. (Note: Walmart is one of NPR's financial supporters.)
Plaintiffs claim the companies earned billions in profit by aggressively marketing and selling prescription opioids.
Richard Ausness, a professor at the University of Kentucky who follows opioid litigation, says unless some kind of structure like this is created, companies could settle for billions of dollars with one group of towns and cities but still face other lawsuits.
"Obviously they don't want too many outliers suing them after they've settled with the majority," Ausness told NPR. "This proposed settlement seems to anticipate that and provide for as much of a global settlement as possible."
Attorneys for two of the drug companies involved in this lawsuit described the proposal as interesting but preliminary. The attorneys, who asked not to be named because they had not been authorized to speak publicly, said they haven't had time to work through the details of how it would work.
Overdoses tied to prescription pain pills have killed more than 200,000 Americans, according to the Centers for Disease Control and Prevention, and cost taxpayers billions of dollars.
The wave of civil suits has already forced one drugmaker, Insys Therapeutics, into bankruptcy. Another major firm, Purdue Pharma, has indicated they may follow suit. Judge Dan Polster, who is overseeing a trial of hundreds of consolidated opioid cases, has repeatedly urged communities and companies to reach a deal.
That hasn't happened yet. But intense negotiations are continuing, and sources tell NPR they expect many of the two dozen drug industry firms involved in the consolidated Ohio case to agree to some kind of substantial payout. In the end, there may be multiple settlements, involving separate companies or groups of companies, all contributing to a national fund designed to ease the opioid epidemic.
"Tens of billions of dollars would be needed to make a real significant impact on this epidemic," Rice told NPR.
Under this plan, nearly every community in the U.S. — cities, towns, villages and counties — would be swept into a single "negotiating class." Under that legal designation, local leaders would be able to approve or disapprove any settlements reached with drug companies. The vote would be weighted by population.
If three-quarters of communities sign off on deals that are struck, it would be finalized and money would be paid out, ending the company's liability. A separate emergency fund, roughly 15% of any settlements would be set aside for towns or cities particularly hard-hit by the opioid crisis. And 10% of all drug industry payouts would go to pay the hundreds of private trial attorneys involved in the litigation.
Communities that don't want to be part of any global settlement can also opt out entirely, but Rice says this plan was developed in consultation with many of the local officials and legal teams around the U.S. that are suing the drug industry.
Meanwhile, pressure has been growing on drug companies in recent months to reach some kind of accord with communities. In March, Purdue Pharma settled with the state of Oklahoma for roughly $270 million. Before its bankruptcy, Insys Therapeutics agreed to pay the federal government more than $225 million in penalties tied to opioid marketing. Five of that company's executives were convicted of federal racketeering charges. Johnson & Johnson is currently on trial in Oklahoma state court.
With the much larger Ohio case set to begin in October, public scrutiny and pressure will only grow. Judge Polster has refused to dismiss claims against drug firms, and he's made it clear he feels the drug industry is partly to blame for the opioid epidemic.
During a hearing in preliminary January 2018, Polster urged the parties to reach a deal that would "get some amount of money to the government agencies for treatment. Because sadly every day more and more people are being addicted, and they need treatment."
NOEL KING, HOST:
Attorneys who represent hundreds of towns, cities and states have a new plan to deal with the opioid crisis. They unveiled it today in a federal court in Ohio. It lays out, for the first time, how tens of billions of dollars in payments would be distributed if these lawsuits against pharmaceutical companies lead to big settlements. Brian Mann with North Country Public Radio has been following this story for a while. He's with me now.
BRIAN MANN, BYLINE: Hey. Good morning.
KING: OK. So there has been talk of a big, national settlement. People have compared it to the tobacco settlements of the 1990s. What is this opioid proposal?
MANN: Right, so what we're seeing here is really the architecture of how a big, global settlement might work if companies and all of these communities do reach a deal. And what we've been seeing is growing questions about who would get that money, how it would be distributed. Remember. There's a lot on the line here. This is life or death for cities and counties who are dealing with thousands and hundreds of thousands of drug-dependent residents. And they need money to fund rehab programs, recovery centers. And they think the drug industry should help pay for that. And remember. Household name companies like Johnson & Johnson, CVS, also manufacturers like Purdue Pharma - they made billions of dollars selling opioid pain medications that made sick and killed a lot of Americans.
KING: So if this plan is approved by the court, how would it work?
MANN: Right out of the gate, about 25,000 local governments around the U.S. would...
MANN: ...Be swept into a big pool of communities, right? This is big. And they would all be eligible for payouts. And also, they would get to vote on any settlements with drugmakers and distributors. And then within each of those local communities, they'd get to decide how all that money would be spent.
KING: And what does this mean for the drug companies?
MANN: Yeah, this is interesting. I talked with Joe Rice, one of the lead attorneys who's actually suing big pharma. And he says drug makers have been looking for a plan that gets them to final closure, that really ends this nightmare for the industry. Remember. This has already bankrupted one firm - Insys Therapeutics. And another, Purdue Pharma, has talked openly of filing for Chapter 11. So if this plan can convince enough of the country to sign off on a single global deal, it might convince more of these companies to reach a settlement.
KING: That's interesting - so some relief potentially on the part of the companies. Have you gotten any reaction from from any of the pharmaceutical companies yet?
MANN: We haven't gotten their voice on this yet. They're - this was just filed in Ohio. What we do know is that these companies have already begun to settle other opioid lawsuits around the country worth hundreds of millions of dollars. And also, the judge overseeing this huge case in Ohio - this largest consolidated case in the nation where this motion was filed - he's pushing the parties really hard to reach a deal. So I think this pressure on the industry is going to continue to grow. The Ohio case is scheduled to go to trial in October, so the clock there is ticking.
KING: And if a settlement is reached and if a plan like this is implemented, what would it mean for this nationwide fight against opioid addiction - a very serious problem?
MANN: Yeah, I've been spending time in places like Summit County, Ohio, that are fighting to get ahead of this epidemic. And they all say they don't have enough money. A lot of the work - it's pretty amazing. It's being done on a shoestring with volunteers, and they need more programs to literally keep people alive. Judge Bolster, who's overseeing this opioid case in federal court, has said that delaying these payouts could mean more people overdosing, more people dying. So there's a lot on the line here.
KING: Very high stakes - Brian Mann of North Country Public Radio joining us by Skype.
MANN: Thank you so much. Transcript provided by NPR, Copyright NPR.