By Jennifer Oliva and Nicolas P. Terry
The much publicized settlement between Purdue Pharma, its Sackler family owners, and the Oklahoma attorney general that we have discussed here, here, and here, posed an overarching question: Post-Oklahoma, would the opioid litigation center of gravity swing back from the states to the federal opioid multidistrict litigation in Cleveland (discussed in detail here)?
A month later, the Cleveland case remains muted, particularly so for the reporters trying to cover what is happening in Judge Polster’s courtroom where, once again, sunshine seems discouraged. In contrast, outside the Northern District of Ohio, the action has been fast and furious and that’s before the promised Oklahoma trial against the non-Purdue defendants.
Speaking of settlements, West Virginia, the state with the highest drug overdose rate in the United States, settled its claims against “Big Three” drug distributor McKesson Corporation for $37 million on May 2. West Virginia had accused McKesson (America’s largest drug distributor and seventh on the 2019 Forbes Fortune 500 list with an annual revenue north of $208 billion), of negligently flooding the state with prescription opioids.
West Virginia’s complaint against McKesson was damning, alleging, among other things, that the drug distributor sent approximately 1.4 million prescription opioids or 118 opioid painkillers per resident to modestly-sized Grant County, West Virginia alone over a five-year period.
Under the settlement, McKesson will pay West Virginia $14.5 million with an additional $4.5 million each year through 2024. Interestingly, and unlike media reports detailing Oklahoma’s March 2019 $270 million settlement with Purdue, West Virginia’s deal with McKesson neither includes nor resolves the claims against the distributor by West Virginia’s counties and municipalities, which are pending in Cleveland.
The West Virginia-McKesson settlement immediately provoked in-state criticism. Perhaps most notably, Joseph Manchin III, West Virginia’s senior senator, attacked the settlement as “horrific” and “disgraceful.” In a press release entitled Sweetheart Settlement with McKesson Sells Out West Virginia, the Senator compared the deal, which he characterized as “thievery” and contended “made him sick,” to the earlier Oklahoma-Purdue settlement, pointing out that “Oklahoma’s rate of opioid-related deaths is 80% lower than West Virginia, but they got almost 10 TIMES MORE MONEY.”
Piling on, the West Virginia Register Herald published an article, $37 Million McKesson Settlement Includes Nothing to Prevent an Epidemic, which criticized the State for failing to require McKesson to agree to change its behavior going forward. As Stanford University Professor and West Virginia native Keith Humpheys explained, “Certainly it’s not a lot of money to McKesson. They’re going to be fine. I’m also happy West Virginia gets resources, of course, but to me the real cookie in these kind of cases is change in future conduct. If it’s just a matter of writing a check and going on and doing exactly what you’re doing, that just means we’re going to have more suffering and in five years we’re going to sue them and again they’ll write another check.” Even West Virginia Governor Jim Justice conceded that the State was entitled to a better deal.
Further proving that no good deed goes unpunished, Oklahoma Attorney General Mike Hunter also faced criticism subsequent to his settlement with Purdue. State lawmakers accused him of “keeping them in the dark” concerning deal negotiations and failing to defer to the legislature to determine how to allocate the settlement funds. In fact, this latter complaint raises an interesting and nuanced legal point with regard to attorney general settlements that contain prospective remedies. Complex litigation experts, including University of Georgia law professor Elizabeth Chamblee Burch, believe that deals containing forward-looking regulatory requirements raise significant separation of powers concerns.
Meanwhile, and as recently predicted here, state attorneys general continue to join the fray in state-based opioid litigation against opioid manufacturers. On May 16, 2019, five additional states—Iowa, Kansas, Maryland, West Virginia, and Wisconsin—brought suit against Purdue Pharma and its former CEO and co-owner Richard Sackler. Two days earlier, Pennsylvania, which declared a “state of the emergency” on its drug overdose epidemic in early 2018, also sued the opioid manufacturer, contending that Purdue targeted military veterans and the Commonwealth’s geriatric population. As a result, forty-four states are in active opioid litigation in their own state courts. At this point the lone, big state holdout is California.
In other opioid-related state news, Florida recently enacted legislation advanced by State Attorney General Ashley Moody as “a critical weapon in the state’s lawsuit against the pharmaceutical industry.” The bill permits Florida’s opioid litigation attorneys access to the State’s Prescription Drug Monitoring Program or “PDMP.” The Florida PDMP, which was created in 2009 in response to the opioid crisis, is an electronic database that collects information concerning every controlled substance prescribed and dispensed throughout the state. Because the PDMP collects and stores sensitive patent health information, the legislation raised significant patient privacy concerns for several Florida lawmakers. Attorney General Moody addressed those issues by agreeing to the addition of privacy safeguards, including limitations on the information that is permitted to be disclosed to the State’s litigation team to shield patient identification.
The settlements between Purdue and Oklahoma, Kentucky, and West Virginia, and the lack of visible progress in Cleveland have left the opioid litigants without a settlement-stimulating bellwether verdict. That is no longer the case. We now have a decided case and if it proves to be a bellwether, there should be some worried plaintiffs out there. The decision by state district court Judge James Hill threw a lot of cold water on the commonly pled claims against Purdue and the other defendants (and not incidentally runs counter to Judge Polster’s views on the legal validity of similar claims).
The North Dakota claims should be familiar to those following the opioid litigation; overmarketing and failure to monitor distribution theories channeled through state misleading advertising, consumer fraud, and public nuisance statutes. For Judge Hill the first of these was preempted by FDA approval, the second fell on the sword of causation, and the third, public nuisance, had not been recognized as a cause of action in sales of goods cases. Picking through the entrails of the decision it is not surprising that the North Dakota attorney-general has promised an appeal. Notwithstanding, Judge Hill’s statement that the “State is clearly seeking to extend the application of the nuisance statute to a situation where one party has sold to another a product that lateris alleged to constitute a nuisance” will be pored over by many law firm associates in the weeks ahead. Notably, public nuisance is also the only remaining count in the Oklahoma case against the remaining defendants and is currently under attack there in Johnson and Johnson’s motion for summary judgment.
Finally, commentators have long wondered why the pharmaceutical industry has been so active in causing the opioid overdose epidemic but has done little to ameliorate it. Instead we have seen price gouging with naloxone and medication-assisted treatment (MAT) costs that seem high compared to treatment for other chronic diseases. Cynicism replaced skepticism when the lawsuit filed by the Massachusetts attorney general alleged that in 2014 Purdue Pharma embarked on a secret project called Project Tango. Tango (that in a recent filing the Sacklers argue was a plan floated by a third-party private equity firm that was “subsequently abandoned.”) apparently was a strategy to enter the addiction treatment market medication assisted treatment market such that Purdue would become an “end-to-end pain provider.”
Given the overpromotion allegations against all the opioid manufacturers, it was hard not to be curious whether similar issues would arise at that other “end.” Some answers are contained in a new indictment handed down against Indivior Inc. The allegations against this manufacturer of the MAT drug suboxone (buprenorphine and naloxone) film bear an eerie similarity to the allegations against the opioid manufacturers. According to the Department of Justice, Indivior deceived providers and insurers “into believing that Suboxone Film was safer, less divertible, and less abusable” than alternative MAT drugs and looked to boost profits by using a program that connected opioid-addicted patients with “doctors it knew were prescribing Suboxone and other opioids to more patients than allowed by federal law, at high doses, and in suspect circumstances.” End-to-end indeed!
The only public date certain for the Cleveland litigation is October 21, 2019, when the first and already much delayed of the bellwether trials should begin. If the opioid shoes continue to drop at the current rate, by then the parties may have more data from the disruptive state actions that they are likely to glean from the Cleveland trials. In the meantime, don’t forget to tune in to Judge Thad Balkman’s courtroom in Oklahoma starting May 28.
Nicolas Terry is the Hall Render Professor of Law at Indiana University McKinney School of Law where he serves as the Executive Director of the Hall Center for Law and Health and teaches various healthcare and health policy courses. His recent scholarship has dealt with health privacy, mobile health, the Internet of Things, Big Data, AI, and the opioid overdose epidemic. He serves on IU’s Grand Challenges Scientific Leadership Team, working on the addictions crisis and is the PI on addictions law and policy Grand Challenge grants. His podcast is at TWIHL.com, and he is @nicolasterry on Twitter.