JNJ's $260M Settlement Could Serve As Global Opioid Deal Template: Analyst

Over the weekend, Johnson & Johnson (NYSE: JNJ) reached a major opioid litigation settlement that could have broader implications for the biopharmaceutical industry.

What Happened? Johnson & Johnson agreed to a $260-million settlement with the state of New York. However, there are still a number of ongoing opioid lawsuits involving Johnson & Johnson and a handful of other opioid manufacturers and distributors.

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Why It’s Important: Johnson & Johnson’s settlement removed the company from a large New York trial that starts on Monday. The trial involves several opioid distributors and manufacturers, including AmerisourceBergen Corp. (NYSE: ABC), Cardinal Health Inc (NYSE: CAH), McKesson Corporation (NYSE: MCK), Endo International PLC (NASDAQ: ENDP) and Teva Pharmaceutical Industries Ltd (NYSE: TEVA).

Bank of America analyst Jason Gerberry said Monday that a global opioid settlement has been in the works for years now, and the New York attorney general indicated the J&J deal was negotiated in coordination with other state AGs that have been involved with the global deal talks.

Gerberry said the next six to eight months will be critical in determining whether a global deal is feasible. Even if a global deal is not reached, Gerberry said distributors like AmerisourceBergen, Cardinal Health and McKesson could use the JNJ deal as a template for their own individual settlements as well.

“Given that ABC/CAH/MCK have all reserved for a potential global settlement, alongside JNJ, there is potential for the three to use the JNJ agreement as a framework for its own settlement, in particular the structure around the proportional amount in conjunction with the global settlement framework,” Gerberry said.

The New York trial will be the first major opioid trial to go before a jury, so the outcome of this case will also be critical in determining how additional opioid litigation plays out in the future.

Benzinga’s Take: Trials are uncertain and come with negative press for a group of drug makers and distributors that want to distance themselves from the opioid crisis as much as possible. However, as the $260-million Johnson & Johnson settlement demonstrates, opioid settlements will not be cheap or easy for the companies involved.