Teva Agrees On $4.35B Opioid Settlement

Teva Agrees On $4.35B Opioid Settlement

Introduction

A $4.35 billion countrywide settlement offered by Teva Pharmaceutical Industries might end thousands of cases related to the drugmaker's claimed involvement in the U.S. opioid epidemic.

According to the plan, Teva would give state and local governments a monetary payment of up to $3.7 billion over a period of 13 years along with a donation of naloxone, an opioid overdose reversal medicine, valued at $1.2 billion. Teva, located in Israel, will also cover the legal costs spent by the states, municipal governments, and Native American tribes as well as pay almost $100 million to their respective tribes.

According to Teva's settlement proposal, state and local governments might choose more cash instead of receiving an allocation of the overdose medicine, valued at 20% of the drug's list price.

The settlement's monetary component is greater than what Teva's CEO proposed in May. Teva's CEO at the time informed analysts that he anticipated the business would shell out about $2.6 billion in cash and medication to secure a federal settlement.

The proposed payment comes as uncertainty around an opioid deal has caused Teva's New York-listed shares to decline 11% thus far this year.

Teva, which still owes around $20 billion in net debt, had hoped to strike a deal with more medications and less cash, but several states and counties objected, disputing the worth of the drugs since they were made for far less than the rates used in the settlement agreements.

It is an important step forward in tackling the opioid issue, according to the attorney general of Iowa, a leading state negotiator. He even stated that it is anticipated that this funding would have a substantial impact on treating opioid addiction disease and averting deadly overdoses.

The settlement with Teva depends on other agreements made by the Allergan division of AbbVie. In 2016, Teva purchased the generic medicine division of Allergan. Allergan must negotiate its statewide opioid settlement for the Teva agreement to go into force, and the two businesses must agree the amount Allergan owes Teva for claims made before the 2016 transaction. An inquiry for comments was not immediately answered by Allergan.

If insufficient numbers of state and local governments agree to accept the terms, the Teva settlement won't be finalized. The amount of the settlements that Teva has previously agreed to with West Virginia, Texas, Florida, Rhode Island, and Louisiana would be accounted for in the proposed $3.05 billion cash compensation.

The state of New York will not be a part of the agreement and will keep pursuing legal action against Teva. In December, a New York jury determined that the business was to blame for the state's opioid problem.

More than 3,000 lawsuits were brought by American states, towns, and counties against opioid producers, distributors, and pharmacies, accusing them of understating the risk of addiction and failing to prevent pill diversion for criminal purposes.

According to federal statistics, the U.S. opioid problem has resulted in more than 500,000 overdose fatalities over the previous 20 years, including more than 80,000 in 2021 alone.

In previous agreements, the company's desire on making medications a significant part of its opioid settlements proved to be a problem. State and local governments rejected Teva's 2019 proposal to resolve its statewide opioid liability for $250 million in cash and $23 billion in donated pharmaceuticals.