J&J, distributors finalize $26 bln opioid settlement

STORY: In what is likely to the biggest settlement to result from the opioid crisis, Johnson & Johnson, along with the three largest U.S. drug distributors, agreed on Friday to finalize a proposed $26 billion settlement resolving claims by states and local governments that they helped fuel the opioid epidemic.

The lawsuits accuse distributors McKesson, AmerisourceBergen and Cardinal Health of lax controls that allowed massive amounts of addictive painkillers to be diverted into illegal channels, and that drug makers, including J&J, downplayed the risk of addiction when marketing the pain medicines.

The deal aims to resolve more than 3,000 lawsuits seeking to hold the companies responsible for an opioid crisis that has led to hundreds of thousands of overdose deaths over the last two decades.

The proposed settlement, first announced in July, calls for the distributors to pay up to $21 billion over 18 years and J&J to pay up to $5 billion over nine years, money that officials say will be used to fund treatment and other programs aimed at addressing the opioid crisis.

In a separate case, a U.S. judge on Friday ruled that a subsidiary of J&J can remain in bankruptcy, preventing plaintiffs from pursuing 38,000 lawsuits alleging Johnson & Johnson’s baby powder and other talc products cause cancer.

J&J is attempting to resolve those lawsuits by putting the recently formed subsidiary, LTL Management, into bankruptcy - arguing that bankruptcy was the only practical way to resolve the sheer volume of lawsuits filed.

Legal experts dubbed the maneuver a "Texas two-step" because it exploited a Texas law that allows a company to split into two, saddling one with liabilities while the other company takes valuable assets.

The strategy angered lawyers for the plaintiffs, who in court called it "rotten to the core.”

J&J shares were up nearly 5% in midday trading.