CVS Health Corp. and Walgreens Boots Alliance Inc. have agreed to pay more than $10 billion in a landmark settlement to resolve opioid-crisis lawsuits brought by states, cities and other governments.
The two largest U.S. drugstore chains said they reached a framework to settle the collection of lawsuits brought by governments and Native American tribes blaming pharmacies for helping fuel the nation’s opioid epidemic.
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CVS Health Corp. and Walgreens Boots Alliance Inc. have agreed to pay more than $10 billion in a landmark settlement to resolve opioid-crisis lawsuits brought by states, cities and other governments.
The two largest U.S. drugstore chains said they reached a framework to settle the collection of lawsuits brought by governments and Native American tribes blaming pharmacies for helping fuel the nation’s opioid epidemic.
Under the proposed deal, CVS would pay $4.9 billion to states and municipalities and $130 million to tribes over the next 10 years starting in 2023. The company said the agreement isn’t an admission of guilt and that it would continue to defend against any litigation that the settlement doesn’t resolve.
Walgreens said it has offered to pay up to $4.79 billion to states over 15 years and about $155 million to tribes. It also expects to pay up to $753.5 million in attorneys fees over six years. The company said the settlement wasn’t an admission of wrongdoing.
Each state, local government and tribe still must decide whether to participate in the settlement. Plaintiffs’ attorneys appointed to lead the negotiations said they encouraged governments and tribes to join the settlement, which they said holds the pharmacies accountable.
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Cities and counties have said they would use the money to bolster social services focused on the harms of opioid addiction as well as for funds for first responders. There wouldn’t be direct payments to families or individuals. Unlike states’ landmark settlement with tobacco companies, the money couldn’t be redirected into general funds.
CVS Chief Executive Karen Lynch, on a call with analysts, said the settlement is in the “best interests of all parties and helps put a decades-old issue behind us.” She said she was optimistic that states would join the deal since attorneys general were part of the negotiations.
CVS has been in a separate legal battle with its insurers over whether they should cover some of the liability the company faces for the opioid lawsuits.
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Widespread opioid abuse has claimed more than half a million lives and triggered more than 3,000 lawsuits by governments, hospitals and others against players in the pharmaceutical industry, including manufacturers, distributors and drugstores.
Many of the lawsuits allege that pharmacies didn’t do enough to stem the flow of pills into communities. The drugstores have argued that they had tried to stop pills from being illegally diverted and followed procedures required by regulators.
In August, a federal judge in Ohio ordered CVS, Walgreens and Walmart Inc. to pay $650 million over 15 years to two Ohio counties after a jury found the companies liable for contributing to the opioid epidemic.
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That case, closely watched by attorneys elsewhere, was the first decision reached among opioid lawsuits targeting the pharmacy chains. The judge’s order came following a six-week trial; the companies said at the time that they planned to appeal the decision.
In March, CVS agreed to pay $484 million to settle opioid-related claims by the state of Florida, without admitting wrongdoing. Walgreens later agreed to pay $683 million to settle the Florida lawsuit without admitting wrongdoing. CVS, Walgreens and Rite Aid Corp. also settled with two New York counties in 2021 for a combined $26 million.
Representatives from Rite Aid and Walmart weren’t immediately available.
In 2021, a group of states reached a roughly $25 billion settlement with Johnson & Johnson and drug distributors including McKesson Corp. , AmerisourceBergen Corp. and Cardinal Health Inc.
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The deal was completed this summer.
J&J said its $5 billion payment wasn’t an admission of liability. The drug distributors, which are paying about $20 billion over 18 years, said they disputed the allegations against them.
Members of the Sackler family who own Purdue Pharma LP and grew wealthy from sales of OxyContin agreed earlier this year to pay up to $6 billion to settle lawsuits accusing them of helping fuel the opioid-addiction epidemic. The settlement came after an earlier $4.5 billion settlement was overturned by a federal judge.
The family didn’t admit liability but will cede control of Purdue, which filed for bankruptcy in 2019 and pleaded guilty in 2020 to three federal felonies related to the marketing and sale of OxyContin.
CVS said spreading out the settlement payments would allow it to continue to invest in its business. The company for years has worked to transform itself from a pharmacy chain to an integrated provider of medical services, with the biggest step being its 2018 acquisition of insurer Aetna. In September, CVS agreed to buy home-care provider Signify Health Inc. in an all-cash $8 billion deal.
On Wednesday, CVS reported results for the quarter ended Sept. 30 that included a 10% jump in revenue and a $3.42 billion net loss, weighed down by charges for the opioid litigation and other items.
Stripping out one-time items, adjusted earnings came to $2.09 a share. Analysts surveyed by FactSet were expecting adjusted earnings of $2 a share.
CVS said sales were $81.16 billion for the quarter as revenue improved across segments, including a 9.9% increase in the insurance business and a 6.9% gain in the pharmacy business aided by higher prices, purchases of at-home Covid-19 test kits and more prescription sales.
The company raised its earnings-per-share targets for the calendar year and now expects cash flow from operations to be $13.5 billion to $14.5 billion, up about $1 billion from an earlier projection.
Write to Sharon Terlep at sharon.terlep@wsj.com