Teva Reaches Proposed $4.35 Billion Settlement in U.S. Opioid Claims

The proposal requires Teva to pay up to $3.7 billion in cash over 13 years and provide the company with $1.2 billion worth of naloxone for opioid overdose.

US states, cities and counties have filed more than 3,000 lawsuits against opioid manufacturers, distributors and pharmacies, accusing them of downplaying the risk of addiction and failing to prevent pills from being diverted for illegal use.

Teva denies wrongdoing, saying it sold legal drugs approved for pain relief.

Teva’s proposed settlement would allow state and local governments to opt for additional cash in lieu of an overdose drug allocation of 20% of the drug’s list price. The monetary value of the settlement could reach $4.25 billion if state and local governments decide to get the money instead of drugs.

Israeli Teva will also pay about $100 million to Indian tribes and pay legal fees incurred by states, local governments and tribes.

The cash portion of the settlement is higher than Teva’s chief executive suggested in May. CEO Kare Schultz told analysts at the time that he expected the company to pay about $2.6 billion in cash and drugs to reach a nationwide settlement.

However, Schultz said in a statement that Teva is “delighted to reach a nationwide agreement in principle.”

Teva’s settlement is subject to separate settlements by AbbVie Allergan. Teva acquired Allergan’s generic drug business in 2016.

For the Teva deal to go into effect, Allergan must reach its own nationwide agreement on opioids, and the two companies must settle over the amount Allergan owes Teva from claims filed prior to the 2016 sale.

Allergan did not respond to a request for comment.

The Teva settlement will not be finalized unless a sufficient number of state and local governments agree to accept the terms.

The proposed settlement comes as New York-traded Teva shares have fallen 11% this year due to uncertainty over the opioid settlement.

Teva, which still has a net debt of about $20 billion, was keen to strike a deal that would involve less cash and more drugs, but some states and counties were against it, questioning the value of drugs produced much cheaper than the prices specified in the drug agreements. settlement. .

Iowa Attorney General Tom Miller, lead state negotiator, called it “another major step in addressing the opioid crisis.”

“We expect these agents to have a significant impact on the prevention of fatal overdoses and the treatment of opioid addiction,” Miller said.

Paul Geller, a lawyer representing local governments in the litigation, called the agreement “an important step that, like previous settlements in the opioid supply chain, will increase the flow of critical resources needed to mitigate the public health crisis ravaging our country.”

Teva has already negotiated settlements with West Virginia, Texas, Florida, Rhode Island and Louisiana, and their value will be included in the proposed $3.7 billion cash payment.

New York State will not be involved in the settlement and continues to seek a judgment against Teva. A New York court found the company responsible for the state’s opioid crisis in December.

The U.S. opioid crisis has caused more than 500,000 overdose deaths over the past two decades, including more than 80,000 in 2021 alone, according to government figures.

The company’s insistence on including narcotics as the main component of the opioid settlement has been a sticking point in past negotiations.

In 2019, Teva offered to settle its nationwide opioid liability of $250 million in cash and $23 billion in drug grants, which were rejected by state and local governments.

Teva and Allergan were among the latest defendants to reach a settlement in opioid lawsuits that recently ended in West Virginia and San Francisco.

Johnson & Johnson and the top three U.S. drug distributors — McKesson Corp, Cardinal Health Inc and AmerisourceBergen Corp — completed a $26 billion nationwide opioid settlement in February. Purdue Pharma, whose painkiller OxyContin is widely blamed for sparking the opioid crisis, is seeking a $6 billion settlement in bankruptcy court.

Teva upped its report on its second quarter results to go along with Tuesday’s settlement announcement.

The company cut its 2022 revenue forecast and now expects sales to be between $15 billion and $15.6 billion. He predicted between $15.4 billion and $16.0 billion. He maintained his adjusted earnings forecast of $2.40 to $2.60 per share.

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