Teva ‘not optimistic’ about closing $23 billion opioid deal soon

Email Jeff Overley

” href=”http://161.35.220.217/feed-generator/#”>Jeff Overley

Law360 is offering free access to its coronavirus coverage to ensure all members of the legal community have accurate information during this time of uncertainty and change. Use the form below to sign up for one of our weekly newsletters. By subscribing to one of the newsletters in our section, you will be subscribed to the weekly coronavirus briefing.

Law360 (February 10, 2021, 9:15 p.m. EST) – Teva Pharmaceuticals is unlikely to finalize a major opioid settlement until the coronavirus pandemic subsides and allows courtroom trials to resume which tend to bring litigants to the negotiating table, the drugmaker’s chief executive said on Wednesday.

On an earnings call, Teva CEO Kåre Schultz said a deal was not far away, but would still likely remain out of reach until there was an impending trial. . The company based in Israel almost 16 months ago offered to donate drugs he values ​​at $23 billion and pay $250 million to resolve thousands of lawsuits.

“I think we’re close to a settlement…but there’s a difference between being close and finally getting something signed,” Schultz said. “Unfortunately, I think we need some kind of pressure for everyone to come together and reach final settlements in this space of opioid litigation, and so far all trials have been delayed.”

While some state attorneys general have backed Teva’s bid, city and county attorneys in multidistrict opioid litigation balked in 2019calling the $23 billion figure significantly inflated.

Motley Rice LLC co-founder Joe Rice, a lead attorney for the MDL plaintiffs, told Law360 on Wednesday that Schultz’s comments “are the first we’ve heard of any real progress on the resolution with Teva.” and we doubt they are real”.

“The small numbers we’ve heard about aren’t realistic,” Rice said by email, declining to elaborate on the numbers.

After seeing its settlement offer rejected in 2019, Teva expected looming lawsuits to spur compromise. But the start of the pandemic in early 2020 dashed those hopesand Schultz said on Wednesday it could be several more months before the outlook improves.

“I’m still very optimistic about Teva getting a deal. But I’m not so optimistic about when, just because the legal system isn’t really up and running,” Schultz said. “Hopefully as the pandemic improves over the next few quarters, we will see … some pressure from some upcoming lawsuits, and that will result in a final settlement.”

The CEO made similar remarks on previous earnings calls; in November, for example, he described “a very positive dialogue with the AGs” while warning that “the pressure of a real trial” might be necessary.

Schultz was asked on Wednesday’s call if the company could instead pursue a state-only settlement — something consulting giant McKinsey & Co. did last week to resolve opioid investigations – and worry later about the resolution of cases filed by local governments in the MDL.

“I think best for everyone is a framework that includes both states and subdivisions,” Schultz replied. “That will be the most elegant way to do it. But of course you can think up all sorts of other ways to set it up.”

In its annual report on Wednesday, Teva said it had continued to negotiate the terms of the settlement since last month. According to Teva’s report, the $23 billion donation and $250 million cash payment are still “a reasonable estimate” of global settlement costs. But if a national settlement framework is “not finalized for all cases”, the company’s costs would be unpredictable and could include “significant monetary penalties [and] damage.”

Like many other drugmakers, Teva and its affiliates have been accused of recklessly marketing narcotic painkillers and sowing the seeds for a devastating addiction crisis that has killed tens of thousands of Americans every year for the past several years. Unlike other drugmakers, Teva has had serious debt problems, so it offered to settle primarily with product donations rather than cash.

But the proposed donations have encountered serious opposition. Some reviewers have noted that the $23 billion valuation is based on list prices for pharmaceuticals, which are generally higher than what buyers actually pay after the usual discounts and rebates.

Additionally, some state and federal officials have warned that Teva’s proposal to donate enough buprenorphine-naloxone tablets to satisfy 10 years of U.S. demand for opioid addiction drugs eradicate the income of companies that sell such drugspotentially undermining research into better anti-addiction drugs.

A number of other opioid regulations are in the works, including transactions worth a collective $26 billion with drugmaker Johnson & Johnson and drug distributors AmerisourceBergen Corp., Cardinal Health Inc. and McKesson Corp. Although these agreements have not been finalized, there is broad support for their key provisions.

–Edited by Emily Kokoll.

For a reprint of this article, please contact reprints@law360.com.