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A major development on Thursday in the bankruptcy of the maker of the painkiller OxyContin is one more sign of progress in the long-stalled efforts to resolve the litigation over the opioid crisis.
Attorneys general for a handful of states, including New York, ended their opposition to Purdue Pharmas bankruptcy plan, clearing the way for a $4.5 billion settlement.
The progress comes many years into the effort by state and local governments to hold makers, distributors, and sellers of prescription opioids responsible for the opioid crisis, which killed nearly 500,000 people between 1999 and 2019, according to the Centers for Disease Control and Prevention.
In a cover story in the fall of 2019, Barrons reported that the enormously complex litigation, involving thousands of plaintiffs and a diverse range of defendants, was entering a critical phase.
The Covid-19 pandemic, however, derailed progress, as court dates were canceled and trials postponed.
The CEO of one of the many defendants in the sprawling litigation, Teva Pharmaceutical Industries (ticker: TEVA), told Barrons in May 2020 that the postponement of a key trial in New York had pushed off the finalization of a settlement deal.
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Unfortunately in these cases it seems like the lawyers dont really get the final things done until you have some time pressure, and that probably means we wont see a final settlement until we get close to a new, rescheduled New York trial, Teva CEO Kre Schultz said at the time.
That New York trial, the first opioid trial to be held before a jury, has finally started. Opening statements began in late June. There are also trials ongoing in state court in California and in federal court in West Virginia.
Whats more, Johnson & Johnson (JNJ) in late June reached a $230 million settlement with New York state in late June, in advance of the start of the trial. The company said at the time that the settlement wasnt an admission of liability or wrongdoing.
Movement on this trial may advance completion of a final settlement with the plaintiffs, UBS analyst Kevin Caliendo wrote at the time. JNJ has now set a bar here, potentially catalyzing other defendants to reach settlements and failure to do so will not bode well for sentiment.
Those additional settlements have not yet come. Even if they do, theres still a theres a long way to go. The so-called multidistrict litigationa massive proceeding in federal court in Cleveland that brings together thousands of separate casesis working toward a number of trials, including one set to begin in October.
The litigation has been a long-term overhang for shares of some of the defendants. This year, shares of some of the generic drugmakers that are defendants in the cases have fallen, including Teva, which is down 3.7%, and Endo International (ENDP), which is down 46%.
Shares of drug distributors are doing better this year, with AmerisourceBergen (ABC) up 18% and Cardinal Health (CAH) up 6.6%, while the S&P 500 is up 16%.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
Read more from the original source:
Purdue Deal Comes Amid Progress on Opioid Litigation. What to Expect Next. - Barron's
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