Settled, but unsettling... Since 1999, the opioid crisis has claimed half a million lives in the US. Addiction to opioid drugs like OxyContin, Percocet, fentanyl, and heroin has become a national epidemic. During the pandemic, it got worse: opioid overdose deaths last year were up 37% from 2019 to a record 93K. After two years of negotiations, a few companies that have been blamed for fueling the epidemic have reached a historic $26B settlement with states.
A landmark deal... It's the second-largest settlement in US history, after the $206B deal with tobacco companies in the '90s. If completed, the settlement could end thousands of lawsuits and secure funding for communities to fight the epidemic. Think: addiction treatment programs, opioid education, and funds for first responders. In addition to the payout, distributors also agreed to create a system to help them better spot suspicious drug orders.
Investors reward certainty... Despite the major price tag, shares of McKesson, Cardinal, and AmeriCorp jumped ~5% this week after reports anticipating the settlement broke — J&J stock barely budged. Meanwhile, pharma companies that didn't participate in the settlement — like Teva and AbbVie – face more uncertainty. Investors don’t know how much longer their lawsuits will last, and how much they might cost. OxyContin-maker Purdue Pharma had to file for bankruptcy two years ago to handle its legal liabilities.