The opioid epidemic has dominated the 24-hour news cycle for the past four years. Drug overdose deaths have surpassed car accidents pursuant to accidental deaths. Johnson & Johnson (JNJ), Cardinal Health (CAH), AmerisourceBergern (AMC) and McKesson (MCK) struck a $26 billion opioid deal this past summer. Apparently, enough states and municipalities have agreed to the settlement to make it official. However, about attorneys general from seven states – Alabama, Georgia, New Mexico, Oklahoma, West Virginia, Washington and Nevada – because they thought their share of the settlement was not enough to cover their states’ cost of the epidemic.
Alabama AG Steve Marshall must have had a sudden change of heart. Last week Marshall settled with Endo International (ENDP) a day before the Alabama was to face Endo and McKesson in court:
Alabama was expected to go trial Monday of this week. However, Alabama AG Steve Marshall signed an emergency opioid settlement with Endo (END) Sunday night. Marshall is also negotiating feverishly with McKesson (MCK). I explain why Alabama was in such a rush to settle.
The other oddity was that Alabama nor Endo announced the settlement. The settlement was divulged by McKesson, which is attempting to mediate the state’s claims out of court:
The State of Alabama and McKesson Corporation jointly request that the trial be continued.
As the Court knows, the State has completed a settlement with Endo, the other defendant. The
State is continuing to work through the mediator to resolve issues with McKesson, and the Parties
believe that additional time will allow them to complete a settlement and achieve a resolution
without the need for a trial. The Parties request that the Court continue the trial, resetting a trial
date on April 15, 2022, or as soon thereafter as the Court’s schedule permits.
The court date has been post-posed until April 15, 2022, assuming it ever comes to that. Not only did Marshall not tell the public about the settlement with Endo and further mediation efforts with McKesson, but he did not notify Nevada AG Aaron Ford. The Shock Exchange is sure these state AGs talk to each other all the time. He is sure that no one state AG made the decision to avoid the global settlement and go it alone. It appeared that the seven or so AGs that did not settle were “soldiers in arms” of sorts. If that was the case then why would Marshall settle – in the middle of night on Sunday – without notifying Ford?
Marshall sure appeared to have been in a hurry to settle, which implies something major likely has changed. Aaron Ford and the state of Nevada stand to lose as much as $240 million. If Endo and the defendants have more leverage than they had in August when Ford passed on the global settlement, then at a minimum, Ford will likely have to take a major haircut to Nevada’s original settlement offer. It appears Ford fought the law and the law won.
