Teva to pay $4.3B to settle opioid epidemic litigation with

Te­va and about a dozen states have agreed in prin­ci­ple to pay a max­i­mum of $4.25 bil­lion over 13 years (in­clud­ing the al­ready set­tled cas­es for about $550 mil­lion) to set­tle opi­oid-re­lat­ed lit­i­ga­tion that will al­so see the Is­raeli-based gener­ic man­u­fac­tur­er pay an­oth­er $100 mil­lion to Na­tive Amer­i­can tribes.

Spe­cif­ic de­tails of the set­tle­ment are still be­ing fi­nal­ized, sev­er­al state at­tor­neys gen­er­al said, al­though the agree­ment would fol­low the same struc­ture as pre­vi­ous opi­oid set­tle­ments, in­clud­ing the $26 bil­lion agree­ment with opi­oid dis­trib­u­tors and John­son & John­son.

Te­va CEO Kåre Schultz told an­a­lysts in Wednes­day’s earn­ings call that the deal is very sim­i­lar­ly struc­tured to the one agreed up­on by J&J and Amerisource­Ber­gen, Car­di­nal Health, and McKesson.

“That means that the ac­tu­al im­ple­men­ta­tion will start some­time next year,” Schultz added.

Cal­i­for­nia At­tor­ney Gen­er­al Rob Bon­ta said last night that states al­leged Te­va pro­mot­ed po­tent, rapid-on­set fen­tanyl for use by non-can­cer pa­tients, de­cep­tive­ly mar­ket­ed opi­oids by down­play­ing the risk of ad­dic­tion and over­stat­ing their ben­e­fits and failed to com­ply with sus­pi­cious or­der mon­i­tor­ing re­quire­ments along with its dis­trib­u­tor, An­da.

“One prob­lem we en­coun­tered with Te­va (as we have with oth­er man­u­fac­tur­ers) is the ad­vice it gave when opi­oids were los­ing their ef­fec­tive­ness for clear­ly ad­dict­ed pa­tients – just up the dosage. I don’t have enough ad­jec­tives to de­scribe how poor that ad­vice was,” Ten­nessee At­tor­ney Gen­er­al Her­bert Slatery III said in a state­ment.

As part of this lat­est deal, Te­va will al­so pro­vide up to $1.2 bil­lion in gener­ic nalox­one (val­ued at whole­sale ac­qui­si­tion cost), which can re­verse an opi­oid over­dose, over a 10-year pe­ri­od, or $240 mil­lion of cash in lieu of prod­uct, ac­cord­ing to each state’s wish­es.

The ne­go­ti­a­tions are be­ing led by Cal­i­for­nia, Illi­nois, Iowa, Mass­a­chu­setts, New York, North Car­oli­na, Penn­syl­va­nia, Ten­nessee, Texas, Ver­mont, Vir­ginia and Wis­con­sin. Te­va and New York are al­so still en­gaged in fur­ther ne­go­ti­a­tions, the states and Te­va con­firmed.

Con­necti­cut At­tor­ney Gen­er­al William Tong added that this set­tle­ment al­so has no im­pact on the on­go­ing mul­ti­state price-fix­ing case Con­necti­cut is lead­ing against Te­va.

Te­va said in an SEC fil­ing yes­ter­day that it:

ex­pects that it will have the doc­u­men­ta­tion for the na­tion­wide set­tle­ment agree­ment fi­nal­ized with­in the com­ing weeks, with the na­tion­wide set­tle­ment sign-on process for states, sub­di­vi­sions, and tribes to fol­low. While the agree­ment will in­clude no ad­mis­sion of wrong­do­ing, it re­mains in our best in­ter­est to put these cas­es be­hind us and con­tin­ue to fo­cus on the pa­tients we serve every day.

“And the un­der­stand­ing be­tween the par­ties is, of course, that by far the ma­jor­i­ty of states and sub­di­vi­sions will opt-in. That’s the whole point of all the ne­go­ti­a­tions and ob­sta­cles, that you have a na­tion­wide set­tle­ment in prin­ci­ple. So we are very op­ti­mistic that we will see a very high par­tic­i­pa­tion rate, prob­a­bly sim­i­lar to what you saw with J&J,” Schultz told an­a­lysts.

While the new opi­oid set­tle­ment was the head­lin­er for the earn­ings call, rev­enue came in for the drug­mak­er at $3.8 bil­lion for Q2.

Part of that is due to the com­pa­ny’s launch back in March of a gener­ic form of lenalido­mide, aka Bris­tol Mey­ers’ on­col­o­gy block­buster Revlim­id. Com­pa­ny rev­enue guid­ance for 2022 had al­so dropped ap­prox­i­mate­ly $400 mil­lion, from a range be­tween $15.4 – $16.0 bil­lion to $15.0 – $15.6 bil­lion. Te­va not­ed in an SEC fil­ing and on the an­a­lyst call that the guid­ance change was main­ly due to “con­tin­ued for­eign ex­change head­winds.”

“There are no re­main­ing tri­als cur­rent­ly sched­uled against us in 2022, with the pos­si­ble ex­cep­tion of the re­lease phase of the tri­als in New York opi­oid lit­i­ga­tion. Ad­di­tion­al­ly, New York State and sub­di­vi­sions are en­gaged in on­go­ing set­tle­ment ne­go­ti­a­tions,” Schultz added on the con­fer­ence call.

Structured Settlements