SEATTLE (Legal Newsline) - Three weeks after closing arguments were postponed until July at the request of lawyers for defendants, three opioid drug producing companies accused of causing an epidemic agreed on May 3 to settle with Washington State for $518 million.
State Attorney General Bob Ferguson who launched the lawsuit against McKesson Corp., Cardinal Health and AmerisourceBergen Drug Corp., said the money would go to help repair the human damage caused by the drug epidemic.
Plaintiff attorneys have estimated it could take 30 years to undo.
“This is a historic resolution,” Ferguson said on the AG website. “One of the largest in state history, we forced these companies to stand trial for their conduct. Washingtonians will receive approximately one half billion dollars to combat the opioid epidemic — including $46 million more than Washington would have received if we had accepted the national settlement last year.”
Originally, Ferguson had asked for $38 billion in damages to enact anti-drug programs including treatment services, criminal justice costs, public education campaigns and programs covering a period of 15 years.
The trial which began on Nov. 15 in the King County Superior Court was streamed live courtesy of Courtroom View Network. A bench trial without a jury, the case was to have been decided by Judge Michael Scott.
Similar trials of opioid manufacturers and distributors are ongoing in West Virginia and Florida.
Ferguson filed a lawsuit against the companies in 2019, accusing them of irresponsibly over-promoting and distributing opioid drugs that led to hundreds of overdose deaths in the state. The Washington State Department of Health estimated 1,200 in 2020.
The charges included causing a public nuisance and violating the Consumer Protection Act.
The three distributor defendants took pills from the manufacturers and supplied them to hospitals, doctor’s offices and pharmacies. The most commonly shipped opioid drugs include OxyContin, Hydrocodone, methadone and fentanyl.
As in other opioid trials, plaintiff attorneys for Washington State focused on the contention that the epidemic began in the 1990s. The medical community, formerly tight in prescribing opioid pills usually for end-of-life terminal conditions such as cancer in which drug addiction was not a concern, became more “liberal,” prescribing pills for less serious conditions.
Proponents of freer opioid dispensing said pain was being “undertreated.” However, plaintiff attorneys said the drug companies were motivated by expanding their market for drugs and the resulting profits.
The companies were accused of not properly monitoring suspicious orders which resulted in illicit diversions of drugs falling into the wrong hands. A suspicious order is one that deviated from a normal pattern of size (number of pills) or a change in the frequency of orders.
Defense attorneys sought to show that the epidemic was caused by societal problems and the abuse of illegal street drugs such as heroin and the powerful opioid fentanyl. They maintained that the U.S. Drug Enforcement Administration, the agency that set threshold limits on how many opioid pills manufacturers could supply, had set the drug limits too high.
Plaintiff attorneys countered that many heroin users got their start using prescription opioids and took up heroin when the opioids became too expensive or difficult to get.
In early March attorneys for the defense asked that the case be tossed out for lack of proof, but Scott rejected the motion.
A highlight of the trial was the appearance of Joe Rannazzisi, former head of the Office for Diversion Control with the DEA who retired in 2015. Called as an expert witness for the state, Rannazzisi oversaw the massive increase in the quotas that set how many opioid pills manufacturers can sell and came to national fame in 2018 after appearing on “60 Minutes,” criticizing federal opioid policy as too lax. He has since become a $500-an-hour expert for private lawyers representing state and local governments suing the opioid industry.
Rannazzisi testified that the epidemic spiraled out of control after 2004 because of over-prescribing doctors, the growth of internet pharmacies, profit-motivated chain drug stores and irresponsible clinics called “pill mills.”
“They had a huge customer base and they used it to veil their activities,” Rannazzisi said of the web pharmacies. "They could operate in warehouses and basements. If you had a room where you could store up drugs, you had an internet pharmacy.”
In 2008, Congress approved the Ryan Haight Online Pharmacy Consumer Protection Act to regulate online internet prescriptions.
The DEA issued memos warning the distributors of ignoring guidelines of the Controlled Substances Act, met with them and conducted their own investigations. However Rannazzisi said DEA officials were limited in their ability to monitor the distributors which he said would require close inspections of their operations over an extended period of time.
Large distributions of opioids including hydrocodone, alprazolam and phentermine were distributed in states including Florida, Texas and Colorado.
Rannazzisi said a person could receive 120 pills at a time and 15 million hydrocodone tablets were distributed in a single year nationally.
“The volumes (drugs) going out were outrageous,” Rannazzisi said. “We expected them (distributors) to comply, and they continued to ship (pills).”
Plaintiff attorneys said company anti-drug diversion systems did not have adequate staffers to check all the suspicious (red-flagged) orders they received, and the orders were shipped anyway.
The defense produced its own former DEA agent as a star witness, Gary Boggs. With the DEA for 27 years, Boggs later worked for McKesson in its anti-diversion program. He said McKesson had to balance the need to get pain-killing drugs to the patients who needed them and that the company had done the best it could to flag and report suspicious orders to the DEA. He said McKesson was not responsible for the increase in prescriptions for pills coming from doctors.
“McKesson had a responsibility to medical professionals to treat their patients,” Boggs said. “It’s someone who needs pain medication from an open-heart surgery, or cancer, diabetes, or mangled up in a hospital. It’s a balancing act, to make sure the medication is for a legitimate purpose.”
Boggs said the distribution companies operated under the most regulated of industries including by the DEA and U.S. Department of Justice. He added that companies regularly have to be audited by such agencies and have their security facilities, stocks of drugs and files checked.
Boggs said the company’s anti-diversion program was constantly being improved during his tenure and involved due diligence reviews, investigations, regulation and license checks and internet checks of customers.
In 2017, McKesson was ordered by the U.S. Justice Department to pay a $150 million in civil penalties for alleged violations of the Controlled Substances Act and to suspend sales of controlled substances from distribution centers in states including West Virginia, Colorado, Ohio and Michigan.
In 2008, there was a $13.2 million similar penalty.
Settlements were reached. In the case of West Virginia, McKesson agreed to pay the state $37 million in 2019.
Ferguson said his office has scheduled for September a trial against opioid producer Johnson & Johnson and its drug subsidiary Jannsen. He said the state is to receive $183 million in a bankruptcy settlement with Purdue Pharma after company officials admitted they had conspired with doctors to supply drugs for non-medical reasons.
“In recent years the Washington Attorney General’s Office has recovered a total of $714.5 million from opioid litigation,” the AG’s news release read. “This total includes $183 million in recoveries from Purdue Pharma and $13.5 million from McKinsey & Co. (consulting firm) to address harms from the opioid crisis.”