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AG Derek Schmidt announces historic settlement in ongoing opioid litigation efforts

Release Date: Jul 21, 2021

TOPEKA – (July 21, 2021) – Kansas has reached a settlement with a major pharmaceutical company and three opioid distributors as part of the state’s ongoing efforts to bring accountability to those that fueled the opioid-addiction crisis and provide funds to support addiction services, Attorney General Derek Schmidt said today.

The settlement announced today includes Cardinal Health Inc., McKesson Corporation and AmerisourceBergen Corporation, the nation’s three major pharmaceutical distributors, as well as pharmaceutical company Johnson & Johnson. In addition to financial terms, the distributors have also agreed to changes in the pharmaceutical industry to help prevent a similar prescription-drug crisis from happening again. Johnson & Johnson will stop selling opioids, will not fund or provide grants to third-parties for promoting opioids and will not lobby on activities related to opioids.

Schmidt said the terms of the agreement resolve the claims of Kansas and other participating states, as well as local governments nationwide. States will have 30 days to sign onto the deal and local governments in participating states will have up to 150 days to join. The majority of the funding from the agreement is to be spent on opioid treatment and prevention.

“We continue to move forward in our efforts to hold pharmaceutical companies and others accountable for the destruction their business practices caused to the lives of Kansans,” Schmidt said. “These settlement negotiations are extraordinarily complex. However, my objective remains simple: Get as much money as possible into the hands of state and local governments, and service providers, in Kansas to pay for addiction treatment as soon as possible – and of course, change corporate behavior to stop the practices that fueled this damage in the first place.”

The total value of the settlement is approximately $26 billion. Each state’s share of the funding will be determined by agreement among the states using a formula that takes into account the impact of the crisis on the state – the number of overdose deaths, the number of residents with substance use disorder, and the number of opioids prescribed – and the population of the state. The state’s share also will be affected by the number of local jurisdictions that decide to join the settlement.

The conditions of today’s 10-year agreement with the pharmaceutical distributors include:

  • Establishing an independent clearinghouse for tracking where drugs are going and how often.
  • Maintaining a data-driven system to detect suspicious opioid orders from customer pharmacies.
  • Terminating customer pharmacies’ abilities to receive shipments, and report those companies to state regulators, when they show certain signs of drug diversion.
  • Prohibiting sales staff from influencing decisions related to identifying suspicious opioid orders.
  • Requiring senior corporate officials to engage in regular oversight of anti-diversion efforts.

The agreement is the latest result of ongoing efforts by Schmidt’s office to combat the opioid epidemic. In February, Schmidt joined a coalition of attorneys general from 46 other states, the District of Columbia and five U.S. territories in reaching a settlement with McKinsey & Company, one of the world’s largest consulting firms. The settlement resolved allegations the company violated the Kansas Consumer Protection Act by helping opioid companies illegally promote their drugs and profit from the opioid epidemic. Kansas will receive $4.8 million from the McKinsey agreement to be used for drug treatment and addiction abatement.

Schmidt has also reached separate agreements in principle to resolve the state’s claims against Purdue Pharma and Mallinckrodt Pharmaceuticals plc, but each of those companies then filed for bankruptcy and negotiations through bankruptcy court continue.

Kansas also is engaged in ongoing negotiations with other companies the state believes played a role in fueling opioid addiction.

Earlier this year, Kansas legislators approved Schmidt’s proposal to ensure funding recovered through these settlements is used to address addiction and help ensure services are provided throughout the state. Funding will be available through a grant review board created by the statute. State agencies, local governments and not-for-profit entities may seek funding for addiction treatment and abatement through the board, which is currently being formed.

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