- Teva will pay $85 million to settle a lawsuit claiming its business practices contributed to an opioid crisis that has plagued Oklahoma. The Israeli pharmaceutical giant did not admit to any wrongdoing in its settlement.
- Oklahoma Attorney General Mike Hunter filed the lawsuit in mid-2017, targeting Teva, Allergan, Johnson & Johnson, Purdue Pharma and some of their subsidiaries for "false and deceptive marketing campaigns" that didn't appropriately convey the addiction risks posed by opioids.
- Terms of Teva's settlement, which was announced May 26, should be finalized over the next couple weeks, according to a statement from Hunter. The payment will be used to "abate the opioid crisis" in the state — where 388 opioid overdose deaths occurred in 2017, reflecting a rate of 10.2 deaths per 100,000 people.
The Oklahoma trial kicked off Tuesday and could set the stage for how a recent wave of state-level lawsuits against opioid manufacturers will play out.
Johnson & Johnson and its subsidiaries are the last remaining defendants in the case. In March, Purdue agreed to settle the state's claims for $270 million. Allergan, meanwhile, sold its generics business to Teva in 2016 and was never served the complaint, according to a company spokesperson.
The legal team representing Oklahoma underscored in their opening remarks how heavy the burden of opioid misuse and addiction has been on the state.
Hunter said his state saw 4,653 unintended overdoses involving prescription opioids between 2007 and 2017; more than 28,000 admissions for opioid and heroin treatment through state services between 2012 and 2018; and center care members birth hundreds of babies each year who are diagnosed with opioid-related neonatal abstinence syndrome.
Hunter also noted that Oklahoma in 2013 ranked seventh for prescription pain reliever abuse for kids aged 12 to 17.
"The numbers that general Hunter just went over are more than just statistics. Those are lives. And those numbers are sobering, they're tragic, and they're real," said Brad Beckworth, a partner with Nix Patterson representing Oklahoma.
Oklahoma's lawsuit claims opioid manufacturers created a public nuisance through their operations in the state. It's an argument J&J says doesn't hold water.
"Oklahoma for more than a century has limited public nuisance to disputes involving property or public spaces — for example, to remedy an intrusion from an overgrown hedge," John Sparks, Oklahoma counsel for Janssen Pharmaceuticals Inc. and Johnson & Johnson, said in a statement provided to BioPharma Dive.
"The State ignores this well-established law and now argues that public nuisance allows them to compel any party allegedly contributing in any measure to a social problem to fund all programs that state administrators dream up to address it," Sparks said. "This is not and should not be the law. It threatens every company and industry doing business in the State of Oklahoma."
While J&J battles with state litigators in court, Teva is contending with shareholder dissatisfaction. The company's stock was down nearly 9% Tuesday morning to trade under $10 apiece.
At least a couple Wall Street analysts noted how investors may fear a similar payout to Oklahoma in each of the 50 states, amounting to roughly $4.3 billion in charges.
However, Elliot Wilbur, an analyst at Raymond James, wrote in a May 27 note to clients that the settlement also reflects a $14 fee per opioid prescription across all prescribed opioids — not just Teva's. Should Teva settle in all the other states where it faces or could face opioid-related litigation, the sum on a per-prescription basis would be about 30% lower than the potential $4.3 billion some are worried about, according to Wilbur.
"While it is exceptionally difficult to come up with the price tag that gets this issue into the history books, we continue to believe any ultimate settlement will be reasonably relative to the company’s underlying cash flow generation," he wrote in his note.
The Oklahoma settlement may be a positive for Teva in other ways as well.
The company won't have to deal with another opioid trial until mid-2020 at the earliest, according to Evercore ISI's Umer Raffat. The Oklahoma trial is also being televised live, which — combined with media coverage — would "most likely influence larger additional bodies of litigation yet to come," Wilbur wrote.