New Jersey Could Receive Well over $600 Million to Address the Opioid Crisis

Distributors Settlement | J and J Settlement

TRENTON – Acting Attorney General Andrew J. Bruck announced today that New Jersey intends to join nationwide settlement agreements with New Jersey-based Johnson & Johnson and the country’s three largest pharmaceutical distributors – McKesson, Cardinal Health, and AmerisourceBergen – to resolve claims involving their roles in fomenting the country’s opioid crisis.

In addition to holding the companies financially accountable by requiring payments of as much as $26 billion, the settlements will provide funding to support programs that address the opioid epidemic in New Jersey and across the country, and will require significant changes in the pharmaceutical industry aimed at preventing similar crises in the future.

For the settlements to take effect, a significant number of states and county and municipal governments nationwide will need to agree to the proposed terms. Nearly 4,000 lawsuits against the companies have been filed in courts around the country by states and state subdivisions.

States have until August 21, 2021, to decide whether to participate in the settlements. After that, the companies have until September 4 to determine whether a sufficient number of states have signed on. If enough states are participating, their subdivisions will have through January 2, 2022 to join.

New Jersey, including its county and municipal governments, stands to receive well over $600 million. The actual amount received will depend on how many county and municipal governments choose to participate. Participating states will receive more money if more county and municipal governments join the agreements.

“The opioid crisis has devastated too many New Jersey families and ending the opioid epidemic continues to be one of my Administration’s highest priorities,” said Governor Phil Murphy. “By holding these pharmaceutical distributors accountable for their deplorable actions in fueling the marketing and sale of opioids, we are preventing them from creating another drug crisis in the future. The funds received from this settlement will aid critical opioid use disorder resources and programs, which will strengthen our ability to save lives by preventing overdose deaths and connecting New Jerseyans to supports and treatment when they need it most.”

“No amount of money will ever be enough to heal the wounds caused by this opioid crisis,” said Acting Attorney General Bruck. “But these settlements will bring hundreds of millions of dollars into New Jersey to fund life-saving addiction prevention, treatment, and recovery programs, and will require these drug companies to change their business practices so that this never happens again. The victims of this crisis deserve nothing less.”

“We applaud the Attorney General’s efforts to hold pharmaceutical companies accountable,” said Health Commissioner Judith Persichilli. “These funds will help to ensure adequate access to treatment, harm reduction, and prevention services which are critical at this time as we are deeply concerned about an uptick in overdose deaths as individuals continue to struggle with the grief, loss, social isolation, and economic hardship that has shadowed COVID-19.”

“New Jersey has long been a leader in prevention, treatment, and recovery for individuals and families affected by opioid use disorder,” said Acting Human Services Commissioner Sarah Adelman. “This settlement holds bad actors accountable and provides critical resources to expand life-saving programs and practices. We look forward to working with state and local partners as we help communities heal and avoid further devastation caused by the opioid epidemic.”

“As we continue to hold accountable corporations whose bad conduct helped fuel the opioid epidemic in our state, settlements like this are critical to helping undo the damage they have caused,” said Sharon M. Joyce, Director of the Office of the New Jersey Coordinator for Addiction Responses and Enforcement Strategies (NJ CARES). “The funds derived from this settlement will allow communities throughout the state to address the tragic costs of the opioid epidemic by advancing policies to support prevention and harm reduction, and making medication assisted treatment available to those caught in the cycle of addiction that has brought heartache to so many families.”

Highlights of the settlement agreements include:

Funding Overview

• The three distributors – Cardinal, McKesson, and AmerisourceBergen – collectively will pay up to $21 billion over 18 years.
• Johnson & Johnson will pay up to $5 billion over ten years (11 payments), with up to $3.7 billion paid during the first four years.
• The total amount of funding distributed will be determined by the overall degree of participation by both litigating and non-litigating state and local governments.
• A substantial majority of the settlement money is to be spent on opioid treatment and prevention.
• Each state’s share of the funds has been determined by agreement among the states using a formula that measures the impact of the crisis on the state using several factors – including the number of overdose deaths, the number of residents with substance use disorder, the quantity of opioids delivered, and the population of the state.

Injunctive Relief Overview

The agreement will result in court orders requiring that, for 10 years, Cardinal, McKesson, and AmerisourceBergen must:

• Establish a centralized independent clearinghouse to provide all three distributors and state regulators with aggregated data and analytics about where drugs are going and how often, eliminating blind spots in the current systems used by distributors.
• Use data-driven systems to detect suspicious opioid orders from customer pharmacies.
• Terminate customer pharmacies’ ability to receive shipments, and report those companies to state regulators, when they show certain signs of diversion.
• Prohibit shipping of, and also report, suspicious opioid orders.
• Prohibit sales staff from influencing decisions related to identifying suspicious opioid orders.
• Require senior corporate officials to engage in regular oversight of anti-diversion efforts.

In addition, the agreement will result in court orders requiring Johnson & Johnson to:

• Stop selling opioids.
• Not fund or provide grants to third parties for promoting opioids.
• Not lobby on activities related to opioids.
• Share clinical trial data under the Yale University Open Data Access Project.

The settlement with Johnson & Johnson comes after New Jersey sued Janssen Pharmaceuticals, Inc., a subsidiary of Johnson & Johnson, in 2018, alleging that it had deceived consumers about the dangers of two of the company’s opioid products with high potential for abuse – Nucynta and Nucynta ER. Specifically, the State’s complaint alleged that Janssen had minimized the risks of opioids generally and that Janssen had attempted to differentiate its own opioid products from competitors’ products by deceptively promoting Nucynta and Nucynta ER as safer, milder, and less addictive.

In addition to resolving the State’s claims against Janssen, the settlement with Johnson & Johnson would resolve separate claims involving other Johnson & Johnson subsidiaries’ part in supplying raw opium for opioid pharmaceutical products.

The settlement with the three opioid distributors was negotiated without New Jersey filing a lawsuit, but while its investigations of the companies were ongoing. Those investigations focused on whether the distributors fulfilled their legal duty to refuse to ship opioids to pharmacies that submitted suspicious drug orders.

The settlements announced today follow New Jersey’s announcements of three other resolutions involving companies and individuals whose conduct contributed to the opioid epidemic.

In January 2021, the State settled with John N. Kapoor, the founder of Insys Therapeutics, Inc., for an anticipated $5 million. The settlement resolved allegations that Kapoor unlawfully orchestrated the payment of bribes to New Jersey doctors as part of a nationwide kickback scheme to boost sales of the company’s flagship opioid drug Subsys.

In February, the State announced a settlement with the global consulting firm McKinsey & Company, resolving an investigation into the company’s role in designing aggressive marketing strategies used by some of the nation’s largest opioid manufacturers, including Purdue Pharma. The $573-million nationwide settlement with McKinsey will result in about $16 million in payments to New Jersey.

And in July, New Jersey joined a global resolution of lawsuits it and other states had brought against the Sackler family and their opioid-manufacturing company, Purdue Pharma. That nationwide resolution – valued at approximately $4.32 billion – is expected to result in an estimated $110 million for New Jersey, if approved by the court.

Deputy Attorneys General Lara Fogel, Patricia Schiripo, Brian DeVito and Jesse Sierant, of the Division of Law’s Affirmative Civil Enforcement Practice Group, Assistant Attorney General Janine Matton, and former Assistant Attorney General Kevin Jespersen handled the Johnson & Johnson and Distributors matters on behalf of the State.

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