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Why two US pharma giants have made a $10 billion settlement on opioids

CVS Health and Walgreens, the two largest US pharmacy chains, announced on Wednesday (November 2) that they have agreed to pay a combined $10 billion as a settlement to resolve all opioid lawsuits brought against them by state, local and Native American tribal governments in the country. This is the latest in a range of pharma giants making similarly massive payments in recent years in the US.

Walmart has also agreed to pay approximately $3 billion as a settlement for similar lawsuits, multiple reports stated. CVS and Walgreen have both said that their settlement agreements are not admissions of wrongdoing or liability.

“We know that reckless, profit-driven dispensing practices fueled the (opioid) crisis; but we know just as surely that with better systems in place and proper heeding of red flag warnings, pharmacies can play a direct role in reducing opioid abuse and in saving lives,” said Paul Geller, one of the lawyers who negotiated for the governments, Reuters reported.

What is the opioid crisis in the US?

According to the US Food and Drug Administration, opioids are “Powerful pain-reducing medications that include oxycodone, hydrocodone, and morphine, among others, and have both benefits as well as potentially serious risks.”

The US has been undergoing an opioid overdose crisis for decades, with more than two million people affected by opioid use disorder and 130 people dying each day. Since the late 1990s, pharmaceutical companies in the countries aggressively marketed opioid painkillers, while telling the medical community that patients would not get addicted. However, as prescription rates skyrocketed, so did the misuse of opioids, which made clear the dangers of unchecked prescriptions.

Its toll has been significant, the opioid crisis has caused more than 500,000 deaths over the past two decades. The Centres for Disease Control and Prevention’s (CDC) National Centre for Health Statistics found more than 107,000 drug overdose deaths in the US in 2021, an increase of almost 15 per cent from 2020. The majority of overdose deaths involve opioids, including prescription pain relievers, heroin, and synthetic opioids such as fentanyl.

The widespread deaths have led to more than 3,000 lawsuits being filed against drug manufacturers, distributors and drugstores. State, local and Native American governments have accused drug manufacturers of downplaying their opioid pain medication risks, and distributors and pharmacies of ignoring warning signs that prescriptions were being diverted into illegal trafficking, Reuters reported.

Why have the pharmacy giants agreed to settle?

The lawsuits against CVS and Walgreens allege that the pharmacies filled prescriptions that they should have flagged as inappropriate. Further, it is alleged they did not do enough to prevent the flow of opioids into communities and allowed them to be sold in the black market, the Associated Press reported. The companies, on the other hand, argued the responsibility for the opioid crisis does not lie with them, and they were basically doing their job by filling prescriptions. It was the doctors who were overprescribing the medications, they alleged.

The settlement agreements announced on Wednesday, which CVS and Walgreen state are not admissions of guilt, are contingent on approvals by various governments and do not cover lawsuits involving private litigants, AFP reported.

If the deals are completed, it would put an end to thousands of lawsuits against pharmacies, for allegedly filling inappropriate prescriptions. Under the current agreements, Walgreens has agreed to pay around $4.95 billion over the next 15 years, while CVS said it would pay approximately $5 billion over the next 10 years, beginning from 2023. It would also bring the total value of similar settlements over the years to more than $50 billion, with most required to be used by state and local governments to deal with the opioid crisis, the Associated Press reported.

Other massive payouts by retailers

Pharmaceutical retail giants have recently agreed to pay a number of massive settlements. In August this year, CVS, Walgreens and Walmart were ordered to pay more than $650 million after a federal jury had earlier found that they played a significant role in the opioid crisis in two counties in the state of Ohio, The Washington Post reported.

Later, Walmart and CVS settled with the state of West Virginia in September, the Associated Press reported, for a total amount of $147 million, over their companies’ roles in promoting the oversupply of prescription drugs.

In July last year, three of America’s biggest drug distributors: McKesson Corp, Cardinal Health Inc and AmerisourceBergen Corp, and one manufacturer Johnson & Johnson, agreed to reach a settlement worth $26 billion for their alleged role in fueling the deadly opioid epidemic.

According to litigation documents archived by Johns Hopkins University and the University of California, San Francisco (UCSF), retail pharmacies like CVS, Walgreens, Target, Walmart and Rite-Aid allegedly played a crucial role in the opioid overdose epidemic. They are accused of repeatedly failing to employ safeguards to prevent the over-dispensing and diversion of dangerous substances, and are said to have ignored the Drug Enforcement Administration’s (DEA) policies on prescribing opioids.

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