Aug 7, 2019

Wall Street's fear of an opioids settlement

Data: Money.net; Chart: Axios Visuals

The stock prices of AmerisourceBergen, Cardinal Health and McKesson plummeted yesterday after Bloomberg reported the drug distributors made an opening offer of $10 billion to settle their portion of the national opioids lawsuit.

Between the lines: That figure was a lot higher than Wall Street had expected for those companies, indicating that other defendants — including opioid manufacturers — likely would pay tens of billions of dollars to avoid going to trial.

The intrigue: The investment bank Barclays held an investor lunch in June to size up how much drug distributors could pay to settle allegations they were negligent in the shipping and monitoring of potent painkillers — allegations that have since been tied to newly released federal data.

  • A legal expert at the lunch pegged the drug wholesalers' liabilities between $1 billion and $2 billion, far below their reported initial offer and the $45 billion counter-offer from states.
  • "This may be just the starting point for negotiations, which suggests the actual liability could be higher," Barclays analysts warned Tuesday.

The bottom line: Millions of people have suffered from the opioid epidemic, and the litigation is so complex that a deal is far from certain. But the early numbers show that while a settlement would not bankrupt the major drug distributors, it's not an immaterial amount either.

  • "Even if paid out over multiple decades, it's a potentially meaningful drag," analysts at Robert W. Baird & Co. wrote.

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Johnson & Johnson loses Oklahoma opioids lawsuit

Illustration: Lazaro Gamio/Axios

A judge in Oklahoma ruled today that Johnson & Johnson was responsible for fueling the state's opioid epidemic and will have to pay $572 million in damages — far less than the $17 billion the state had demanded. J&J said it would appeal the decision.

Why it matters: This is a groundbreaking ruling and a potentially ominous harbinger for the opioid companies and distributors at the heart of the enormous national lawsuit pending before an Ohio judge.

Drug overdose deaths spike in urban America

Reproduced from NCHS; Chart: Axios Visuals

For years, death rates from drug overdoses surged in rural America. But now, overdose death rates are rising faster in cities, according to a newly released data analysis from the Centers for Disease Control.

What's happening: The opioid crisis has devastated many rural areas while heroin deaths are climbing in urban centers.

Go deeperArrowAug 7, 2019

The first big opioids verdict is both big and small

Illustration: Sarah Grillo/Axios

Johnson & Johnson has officially been found liable in Oklahoma for deceptive and false marketing of opioids — the first major instance of legal accountability for the opioid epidemic.

Yes, but: If Oklahoma's $572 million judgment is a sign of things to come, states may only be looking at short-term relief — and drug companies may only incur short-term annoyances, rather than crippling penalties.

Go deeperArrowAug 27, 2019