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$500M opioid settlement jeopardized by localities opting out to pursue their own cases

Indianapolis Star logo Indianapolis Star 7/23/2021 Johnny Magdaleno, Indianapolis Star
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Indiana Attorney General Todd Rokita announced Wednesday that Indiana may receive $507 million as part of a major settlement between states and opioid providers — but only if enough local governments sign on.

Three of the country's biggest pharmaceutical distributors — Cardinal Health, McKesson, and AmerisourceBergen — and opioid manufacturer Johnson & Johnson could pay out a total of $26 billion to U.S. states as part of the agreement.

More: Indiana to receive $12.5 million from McKinsey opioid settlement

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The three companies were sued by New York Attorney General Letitia James in 2019 over allegations they provided opioids to pharmacies that submitted suspicious drug orders. Johnson & Johnson was also targeted by the lawsuit for downplaying the addictiveness of opioids. 

a close up of a toy: FILE - This Aug. 29, 2018, file photo shows an arrangement of Oxycodone pills in New York. The three biggest U.S. drug distribution companies and the drugmaker Johnson & Johnson are on the verge of a $26 billion settlement covering thousands of lawsuits over the toll of opioids across the U.S., two people with knowledge of the plans told The Associated Press. The settlement involving AmerisourceBergen, Cardinal Health and McKesson is expected this week. A $1 billion-plus deal involving the three distributors and the state of New York was planned for Tuesday, July 20, 2021. AP Photo/Mark Lennihan, File © Mark Lennihan, AP FILE - This Aug. 29, 2018, file photo shows an arrangement of Oxycodone pills in New York. The three biggest U.S. drug distribution companies and the drugmaker Johnson & Johnson are on the verge of a $26 billion settlement covering thousands of lawsuits over the toll of opioids across the U.S., two people with knowledge of the plans told The Associated Press. The settlement involving AmerisourceBergen, Cardinal Health and McKesson is expected this week. A $1 billion-plus deal involving the three distributors and the state of New York was planned for Tuesday, July 20, 2021. AP Photo/Mark Lennihan, File

None of the companies have admitted wrongdoing.

On top of the payout, any relevant investigations or litigation against the companies for their role in the opioid epidemic would be resolved. But that all depends on whether enough states sign on to the settlement in the next 30 days and, after that, if enough local governments sign on. The pharmaceutical giants get to decide if there is enough of a critical mass of participation for the settlement to move forward.

If it did move forward today, the state of Indiana would receive $269 million. Some local governments prefer to pursue their own litigation against the companies.

More: Doctor linked to deadly patient overdoses in Tennessee before moving to Indy sentenced

"The settlement is structured so that communities will receive guaranteed money, rather than pursuing their own lawsuits and fighting against massive corporations and their lawyers for years to come with no guarantee of any payout," Rokita said in a prepared statement.

"Any Indiana local elected official who has been advised otherwise should come back into the settlement now."

Why local governments opted out

Nearly half of Indiana's cities and counties have sued opioid manufacturers, distributors and dispensers. Local governments want to recover funds they’ve spent on police, fire, treatment programs and prevention.

More: Why Indiana cities are opting out of the attorney general's opioid lawsuit

Under Indiana’s settlement plan, the state will receive 15 percent of any deal, localities share 15 percent and the Family and Social Services Administration will get 70 percent to distribute statewide, with local governments deciding how to spend about half.

Gov. Eric Holcomb signed a law this year that required cities and counties looking to pursue their own legal action to “opt out” of the attorney general's lawsuit by June 30. Indianapolis, Noblesville and Fishers are among the many local governments that opted out because they think they can get better settlements on their own.

Opting out: Noblesville | FishersLafayette | Muncie

"We would not be able to recover that money from the several lawsuits we’ve filed on our own,” Noblesville city attorney Lindsey Bennett told IndyStar. “And it is unlikely we would recover as much money in the state’s lawsuit.”

Localities could opt back into Indiana's settlement plan within 60 days after opting out.

How settlement amounts were reached

The size of each state's payout depends on their total overdose deaths, the number of residents with substance use disorder, and the total number of opioids prescribed. State population was also a factor. 

As part of the agreement the three companies will commit to overhauls of how they monitor and police opioid distribution, including through the creation of a clearinghouse that lets companies and state regulators monitor where drugs are going and how often. Johnson & Johnson has agreed to stop selling opioids all together. 

IndyStar reporter John Tuohy contributed.

Call IndyStar courts reporter Johnny Magdaleno at 317-273-3188 or email him at jmagdaleno@gannett.com. Follow him on Twitter @IndyStarJohnny

This article originally appeared on Indianapolis Star: $500M opioid settlement jeopardized by localities opting out to pursue their own cases

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