Endo agrees to pay $10 million to settle landmark opioid case brought by Ohio counties

Ed Silverman

As a landmark trial over the opioid crisis grows closer, Endo International (ENDP) agreed to a $10 million settlement with two Ohio counties that claimed the drug maker contributed to the problem by inappropriately marketing its addictive painkillers.

The trial, which is scheduled to begin in Oct. 21, will be the first to test arguments made by numerous cities, counties, Native American tribes, and still others that several drug makers and distributors fomented the crisis. Some 2,000 lawsuits have been combined in a massive litigation in a federal court in Cleveland, where a judge has been urging a settlement.

The local governments and other entities are seeking compensation to cover the costs of treating addiction and abuse. For now, several other companies — including Allergan (AGN), Purdue Pharma, Teva Pharmaceutical (TEVA), Johnson & Johnson (JNJ), McKesson (MCK), Cardinal Health (CAH), and AmerisourceBergen (ABC) — are still slated to go to trial this fall.

In a statement, Endo executive vice president and chief legal officer Matthew Maletta called the settlement a “favorable outcome” for the company, which will also provide up to $1 million of two medicines — Vasostrict and Adrenalin — free of charge to the two Ohio counties to use at their discretion. However, he added that the terms should not be “extrapolated” to other pending opioid lawsuits.

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The settlement is much smaller than the deals reached in Oklahoma earlier this year, prior to the start of the first such case to go to trial. Purdue paid $270 million and Teva paid $85 million to settle claims filed by the state. J&J, however, chose to fight the allegations, and a verdict in the trial is expected shortly.

In a client note, John Leppard of Washington Analysis wrote that the deal “appears designed only to spare Endo the expense of the bellwether trial, rather than satisfying their overall potential costs in a comprehensive resolution of government-related opioid claims with the approximately 2,000 cities and counties party to the multi-district litigation… The cash portion of this settlement appears intended to reflect Endo’s estimated costs of having to participate in the bellwether trial itself, rather than their overall liability or culpability.”

Separately, RBC Capital Markets analyst Randall Stanicky noted Endo did not admit any wrongdoing or liability and wrote that, overall, the deal “represents a positive step” toward resolving the opioid litigation and “is a lighter settlement than expected.” That said, Endo still faces 18 cases filed by states, 2,300 by counties or other government entities, 153 by hospitals, and another 131 by individuals. Most are housed in the Ohio court.

“Bottom line,” Stanicky wrote, “while clearly this is an important and positive first step, there is still a long way to go from here.”