Hoppy Kercheval

Opioid settlement with McKesson best case scenario

West Virginia is one of the states hit hardest by the opioid crisis.  The American Enterprise Institute estimates the annual cost to the state is $8.8 billion annually.

Criminal and civil investigations, as well as Pulitzer Prize-winning reporting by the Charleston Gazette-Mail’s Eric Eyre, have revealed how drug companies, with the aid of distributors, doctors and pharmacists, poured highly addictive opioids into the state for years, while regulators failed to act.

West Virginia and other states ravaged by the drug epidemic are going to court to try to punish the offenders and get large settlements that can be put toward addiction treatment and law enforcement.

Last week, Attorney General Patrick Morrisey announced a settlement with McKesson Corp. The drug distribution company will pay the state $37 million. The suit claimed McKesson delivered nearly 100 million pills to the state between 2007 and 2012.
McKesson Corp. is one of the nation’s largest distributors of pharmaceutical drugs. The company reported revenues of $208.4 billion in 2018.

State officials noted that this announcement pushes the total paid in West Virginia’s pursuit of 13 pharmaceutical wholesalers to in excess of $84 million.
West Virginia U.S. Sen. Joe Manchin, who served as the state’s governor from 2005 to 2010, contends Morrisey, who once worked as a lobbyist for the drug industry, and Gov. Jim Justice, cut a bad deal. The “sweetheart settlement with McKesson sells out West Virginia,” Manchin said.

“How can Patrick Morrisey and Jim Justice look West Virginians in the eye and tell them $37 million is fair? It’s pennies on the dollar to what McKesson cost our state.”
Manchin unintentionally hit on the very issue that justifies the size of the settlement: What exactly was the extent of the damage caused by McKesson? Attorneys familiar with similar cases tell me that would have been difficult to prove in this case.

McKesson filled the orders to the pharmacies; it didn’t make the pills, market them to doctors or prescribe them. Lawyers for the state would have to prove that pills delivered by McKesson caused damages and then demonstrate specifically what those damages were.

Additionally, going to trial is always risky, for both plaintiff and defendant. The suit was filed in Boone County and jurors there might be more inclined to punish the drug company, but they also could see addiction as a personal responsibility issue. Any verdict in favor of the state would have been appealed.
The litigation could have gone on for years and become more costly for the state.

It’s worth noting that the settlement is slightly more than the total of the previous two settlements with Cardinal Health and AmerisourceBergin. The top two drug wholesalers in the state agreed to pay a total of $36 million, $1 million  less than McKesson, which was No. 3 in opioid distribution.

And finally, the state did not get stuck with exorbitant attorney fees. Normally, the plaintiff’s attorneys in these kinds of cases would take one-third, but in this case outside counsel is getting $4.85 million, or about 13 percent of total damages.

Yes, McKesson had a role in fueling West Virginia’s devastating and ongoing opioid crisis and it should pay for that.
Terms require McKesson to pay $14.5 million  within three business days of the case’s dismissal with five additional payments of $4.5 million each year through May 6, 2024.
Naturally state officials would have liked to have more money to pay for the continuing battle against drugs and addiction, but in litigation there is a difference between the money you think you deserve and the amount you are able to collect.

​Hoppy Kercheval  is a MetroNews anchor and the longtime host of “Talkline.” Contact him at hoppy.kercheval@wvradio.com.