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21 States Reject $18 Billion Bid to Settle Opioid Litigation

By David Jagielski - Feb 14, 2020 at 12:16PM

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The three big drug distributors have been in talks for months in the hopes of finding a global settlement.

Attorney generals in 21 states rejected an offer from three drug wholesalers for their roles in the opioid crisis in the U.S. According to a report from The Wall Street Journal, an $18 billion offer was not enough for a global solution, with some states were looking for a settlement as high as $32 billion.

The three companies involved in the offer were McKesson (MCK 2.19%)AmerisourceBergen (ABC 2.67%), and Cardinal Health (CAH 2.70%). They were reportedly in talks since October and were looking to make the $18 billion payment over a period of 18 years.

The attorneys general sent back a rejection letter that acknowledged the drug companies' desire to "seek a settlement that is global" but claimed that the offer was "unlikely to achieve that goal."

Pills spilled out of a bottle.

Image source: Getty Images.

Multiple states are going after companies on their own

One of the companies in the discussions but not part of the offer was Johnson & Johnson (JNJ 1.46%). Oklahoma went after the healthcare giant last year for its role in the opioid abuse problem in its state. After J&J appealed an initial fine of $572 million, a judge ordered the company to pay $465 million to settle the case. 

On Jan. 2, Washington state also announced that it was suing J&J related to opioid abuse as well, looking for both civil penalties and damages. The lawsuit stated that the company was "negligent and a public nuisance." 

Despite its legal troubles, J&J was able to beat earnings expectations in its fourth-quarter report, posting adjusted per-share earnings of $1.88. The company released the results on Jan. 22. Over the past 12 months, shares of the healthcare stock have risen 11%, well below the S&P 500's returns of 23%.

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Stocks Mentioned

Johnson & Johnson Stock Quote
Johnson & Johnson
$182.29 (1.46%) $2.63
McKesson Corporation Stock Quote
McKesson Corporation
$321.55 (2.19%) $6.89
Cardinal Health, Inc. Stock Quote
Cardinal Health, Inc.
$54.45 (2.70%) $1.43
AmerisourceBergen Corporation Stock Quote
AmerisourceBergen Corporation
$148.46 (2.67%) $3.86

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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