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CVS, Walmart, Walgreens agree to pay $13.8 billion to settle US opioid claims

Nov 2 (Reuters) – CVS Health Corp ( CVS.N ), Walgreens Boots Alliance Inc ( VBA.O ) and Walmart Inc ( VMT.N ) agreed to pay about $13.8 billion to settle thousands of U.S. state, local and tribal government lawsuits accusing chain pharmacies of mishandling opioid painkillers.

CVS said Wednesday it agreed to pay about $5 billion over 10 years, and Walgreens disclosed in a filing with the U.S. Securities and Exchange Commission (SEC) that it agreed to pay about $5.7 billion over 15 years. Neither company has acknowledged the mistake. Walmart agreed to pay $3.1 billion, mostly up front, according to two people familiar with the matter.

Paul Geller, one of the lawyers who negotiated for the governments, said the settlements with the pharmacies “will bring billions of additional dollars to communities that are desperate for funds to fight the epidemic” of opioid addiction.

“We know that reckless, profit-driven publishing practices fueled the crisis; but we also know for sure that with better systems and proper compliance with warnings, pharmacies can play a direct role in reducing opioid abuse and saving lives,” Geller said.

CVS General Counsel Thomas Moriarty said in a statement that the company is pleased to have settled the lawsuits and that the deal is “in the best interests of all parties, including our customers, colleagues and shareholders.”

Walgreens said in its SEC filing that it “continues to believe it has strong legal defenses” and will vigorously defend itself against any future lawsuits not covered by the settlement.

Both CVS and Walgreens have said their agreements will not be final until certain non-monetary terms are worked out and that the total amount could be reduced if not enough government prosecutors sign on.

Walmart did not immediately respond to a request for comment.

The proposed settlement, which would be the first nationally with retail pharmacy companies, follows nationwide opioid settlements with drug manufacturers and distributors totaling more than $33 billion.

In more than 3,300 lawsuits since 2017, state and local governments have accused drugmakers of downplaying the risks of their opioid painkillers and distributors and pharmacies of ignoring red flags that prescriptions were being diverted into the illegal trade.

They said the resulting human toll, as well as the burden on public health services and law enforcement, is a public nuisance that companies must pay to fix.

CVS, Walgreens and Walmart are the three largest retail pharmacies in the country by market share. If their settlement becomes final, it will end much of the long-running opioid litigation, although cases are still pending against smaller, regionally focused pharmacy operators, including Rite Aid Corp ( RAD.N ) and Kroger Co ( KR .N ).

Prosecutors have won some notable trial victories against chain pharmacies, including a $650.6 million verdict in favor of two Ohio counties against CVS, Walgreens and Walmart, and a ruling that Walgreens contributed to San Francisco’s opioid epidemic.

Previous settlements have brought $21 billion from the three largest US drug distributors, $5 billion from Johnson & Johnson, $4.35 billion from Teva Pharmaceutical Industries Ltd, $2.37 billion from AbbVie Inc and $450 million from Endo International Plc.

Purdue Pharma LP, whose prescription pill OkiContin is widely blamed for causing the addiction and overdose crisis, is being sought by the Sackler family owners to settle claims against them through a $6 billion settlement in bankruptcy court.

State and local governments said they would use the money from the settlement to fight the opioid crisis, which the federal government says has caused nearly 650,000 overdose deaths since 1999 and continues to worsen.

Prescriptions for opioids skyrocketed in the 1990s when companies aggressively promoted the drugs, long used primarily in cancer patients, as a safe way to treat all types of chronic pain.

Overdoses of opioids, including prescription pills and heroin, have further increased during the COVID-19 pandemic, increasing by 38% in 2020 from the previous year and by another 15% in 2021, according to the US Centers for Disease Control and Prevention.

The agency attributed much of the recent increase in overdoses to illegally produced fentanyl, a powerful synthetic opioid.

A congressional report last month put the economic toll of the opioid crisis at $1.5 trillion in 2020 alone.

Reporting by Baranjot Kaur in Bengaluru, Brendan Pearson in New York and Nate Raymond in Boston; Editing: Alexia Garamfalvi, Kenneth Maxwell and Mark Potter

Our Standards: Thomson Reuters Trust Principles.

Brendan Pierson

Thomson Reuters

Brendan Pierson reports on product liability litigation and all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.

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