CVS and Walgreens are ready to wipe their hands clean of the years-long legal battle of opioid related lawsuits and claims levied against them. The pharmaceutical retail companies have agreed to pay a total of $9.9 billion in resolution.
CVS agreed to a $5 billion payout which will be split between different parties, with $4.9 billion going to states and political subdivisions and $130 million going to tribes. The company’s payments will occur every year for the next ten years beginning in 2023. The Associated Press says that this could be the last major payout from CVS following the extensive portfolio of litigation waged against it regarding the opioid epidemic, which has claimed more than 760,000 lives in the U.S. since 1999.
“We are pleased to resolve these longstanding claims and putting them behind us is in the best interest of all parties, as well as our customers, colleagues and shareholders,” said Thomas Moriarty in a press release. Moriarty is the Chief Policy Officer and General Counsel for CVS Health. “We are committed to working with states, municipalities and tribes, and will continue our own important initiatives to help reduce the illegitimate use of prescription opioids.”
More specifics on CVS Health’s agreed payout were revealed in its Q3 earnings call this morning:
During the third quarter, the Company entered into settlement agreements with two states and a tribe to settle all opioid claims against it. In October 2022, the Company agreed in principle to a global settlement framework which, if all conditions are satisfied and the non-monetary terms are finalized, would result in the settlement of substantially all opioid lawsuits and claims filed by other states, political subdivisions and tribes against the Company to be paid over 10 years, beginning in 2023. In the third quarter of 2022, the Company recorded a pre-tax charge of $5.2 billion related to the estimated liability for opioid-related claims.
Walgreens, meanwhile, agreed to pay an estimated $4.95 billion over the next fifteen years. Both companies also pointed out that these payments are not an admission of wrongdoing.
A landmark legal case in 2021 was one of the first widely publicized opioid wins against CVS and its constituent pharmacies Walgreens and Walmart. The Ohio lawsuit, which was covered by The New York Times, cited that pharmaceutical companies were contributing to a public nuisance—a legal term that varies by states which refers to conduct that interferes with the rights of the public, per Cornell Law School. The public nuisance argument was thrown out in similar lawsuits in California and Oklahoma, but the Ohio lawsuit argued that both corporate headquarters and local pharmacies did not report or respond to suspicious prescriptions and orders.