McKesson

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.

Opioid distributors offer $10 billion settlement

A building that reads "McKesson Corporate Headquarters"
McKesson's old headquarters in San Francisco. Photo: Justin Sullivan/Getty Images

The 3 major prescription drug distributors — AmerisourceBergen, Cardinal Health and McKesson — have proposed paying a combined $10 billion to settle the national lawsuit alleging they fueled the opioid crisis through negligent shipping and monitoring of painkillers, Bloomberg reports. States countered with $45 billion.

Why it matters: This is the first look into what the health care industry is willing to pay to make this lawsuit go away. Drug wholesalers operate large cash flows, making a settlement of this size rather manageable for them, but it'd still be a hit to shareholders' pockets because the companies run on low net profit margins.