(Bloomberg) -- The three largest U.S. drug distributors will get to test their defenses to accusations that they helped fueled the opioid epidemic as the first trial over such claims kicks off on Monday in West Virginia.
McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. are heading to West Virginia federal court in a suit brought by two municipalities in the state. Cabell County and the city of Huntington are seeking $2.6 billion to beef up treatment and policing budgets to address the fallout from opioid addiction and overdoses. The non-jury trial will be decided by U.S. District Judge David Faber.
Drug distributors, manufacturers and retailers are facing thousands of similar lawsuits by state and local governments nationwide over the opioid crisis, which has killed more than 400,000 Americans in the past two decades. West Virginia has been among the hardest-hit states, with Cabell County’s overdose-death rate more than five times the national average during the period covered by the suit, according to researchers.
What Bloomberg Intelligence Says
“Opioid distributors’ loss of summary judgment on nuisance and proximate cause issues means a West Virginia federal case over the abuse crisis is trial bound. An eve of trial settlement looks less likely.”
-- Holly Froum, litigation analyst. Click here to read research report.
Most of the suits claim the companies created a public nuisance through their marketing and supply of opioids. In the West Virginia case, the distributors contend public-nuisance law can’t be applied to their deliveries of millions of the opioid painkillers to local retailers over a nine-year period starting in 2005 because the pills were approved by federal regulators and supply chain was licensed by the state.
“This trial will give them a chance to test-drive their defenses and see if they are going to stand up in future cases,” said Pat McGinley, a University of West Virginia law professor.
The trials comes as McKesson, Cardinal Health and AmerisourceBergen -- along with drug maker Johnson & Johnson -- are proposing a $26 billion global settlement of all opioid suits against them. The distributors would pay a combined $21 billion while J&J would put up $5 billion, according to regulatory filings. The deal has yet to be finalized.
In a court filing, lawyers for McKesson and the other companies argued that the local governments can’t prove the “distribution of FDA-approved prescription opioid medicines to state-licensed dispensaries, standing alone, caused them any harm.”
David Matthews, a McKesson spokesman, didn’t immediately comment on the opening of the trial, while Erich Timmerman, a Cardinal Health spokesman, declined comment.
Gabriel Weissman, an AmerisourceBergen spokesman, said the company is prepared to highlight efforts to meet regulatory duties tied to opioid orders. The distributor doesn’t “determine the supply of the medications it distributes, nor do we impact demand for those medications,” he said.
The municipalities want Faber to find distributors ignored red flags about excessive opioid orders from West Virginia doctors. They argue regulatory records show the firms delivered more than 127 million painkillers to the city and county between 2006 and 2014 -- enough for every man, woman and child in the areas to consume 142 pills annually.
The distributors counter the epidemic’s main culprit was not legally prescribed painkillers but illegal drugs brought in by “criminal drug-trafficking organizations.” They point out their shipments never exceeded yearly quotas set by the U.S. Drug Enforcement Administration.Distributors should brace themselves for things to go sour in the West Virginia case, said Richard Ausness, a University of Kentucky law professor following the opioid litigation.“I don’t like their chances much,” Ausness said. “In a place like West Virginia, everyone has seen what happens when you have a lot of these pain pill available.”
A public-nuisance suit against J&J in Oklahoma resulted in a $465 million award two years ago, but the state had sought as much $17.5 billion. West Virginia cases against J&J and other opioid makers will be tried separately at a later date.
The case is City of Huntington v. AmerisourceBergen, 17-cv-1362, U.S. District Court for the Southern District of West Virginia (Charleston).
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