Walgreens To Pay SF $230M After Landmark Opioid Trial Loss
Walgreens To Pay SF $230M After Landmark Opioid Trial Loss
Written By: Dorothy Atkins
Re-posted from Law360 (May 17, 2023, 2:10 PM EDT) — Walgreens Co. has agreed to pay $230 million to San Francisco for its role in the city’s opioid epidemic following a landmark weeks-long bench trial last year that found the pharmacy chain liable for distributing thousands of suspicious painkiller prescriptions in the area without proper screenings, the city announced Wednesday.
San Francisco City Attorney David Chiu announced the deal with Walgreens outside San Francisco City Hall.
A Walgreens spokesperson said in a statement Wednesday that the company disputes liability and it hasn’t admitted liability under the agreement.
“We never manufactured or marketed opioids, nor did we distribute them to ‘pill mills’ and internet pharmacies,” the statement says. “The settlement allows us to focus on our mission of reimagining healthcare and wellbeing for our patients, customers and communities.”
If approved, the settlement would end claims against the sole remaining defendant in San Francisco’s landmark 2018 lawsuit against the opioid industry for fueling the opioid epidemic.
San Francisco’s case was selected as a test in multidistrict litigation over claims the companies illegally fueled the opioid epidemic in the region, and it was the first trial to rope together defendants across the pharmaceutical supply chain: drug manufacturing, distribution and pharmacy dispensing.
The city’s litigation initially named numerous drug manufacturers, wholesale distributors and pharmacies as defendants, but every defendant except Walgreens had reached settlements with the city by the end of an 11-week bench trial on liability, which took place between April and July of last year.
During trial, U.S. District Judge Charles R. Breyer probed a Walgreens executive on its compliance efforts, and heard testimony from federal agents and the city’s expert, Katherine Keyes, a Columbia University professor of epidemiology, who estimated that there are approximately 40,958 individuals who have “opioid use disorder” in San Francisco.
A San Francisco Fire Department official also testified that opioid abuse has become so prevalent in the city that emergency responders now treat an average of seven overdoses daily, whereas public overdoses were a rare occurrence in the early 2000s.
As a result, the city has had to take preventive measures like patrolling high-risk neighborhoods, including the Tenderloin, where the San Francisco federal courthouse is located, and the trial occurred, the official testified.
In August, Judge Breyer handed down a scathing 112-page judgment against the pharmacy giant, finding Walgreens liable for substantially contributing to the city’s opioid epidemic and perpetuating a widespread public nuisance.
The judge concluded that evidence shows Walgreens violated its regulatory duties under the Controlled Substances Act for several years by failing to maintain an effective system for identifying suspicious orders and shipping thousands of suspicious orders to its pharmacies without investigation despite numerous and consistent red flags.
The judge found Walgreens’ conduct exacerbated the local opioid crisis, as well as crime rates and homelessness, while straining the city’s hospitals and forcing streets, parks and public spaces to close.
Following his decision, Judge Breyer set a remedies trial to begin in November to “determine the extent to which Walgreens must abate the public nuisance that it helped to create.”
But the judge vacated the trial date along with other court deadlines just days after Walgreens announced its $5 billion tentative settlement of nationwide opioid litigation, which excluded the Bay Area city, so that San Francisco and Walgreens could engage in settlement talks.
Walgreens’ deal follows numerous eight-figure settlements.
Shortly before the bench trial kicked off in April 2022, Endo Pharmaceuticals agreed to settle the city’s claims for $10 million, and San Francisco also received $60 million from drugmaker Johnson & Johnson and distributors AmerisourceBergen Corp., Cardinal Health Inc. and McKesson Corp., which reached countrywide deals to end opioid litigation brought by states and local governments.
The trial proceeded against Walgreens as well as multiple other defendants, but before closing arguments, Allergan, its parent AbbVie and Teva Pharmaceuticals agreed to settlements worth almost $58 million, leaving Walgreens as the only remaining defendant.
The $58 million settlement included $34 million in cash, $20 million worth of the overdose-reversal drug naloxone and almost $4 million in fees for private lawyers representing San Francisco.
City Attorney Chiu said Wednesday that no amount of money will bring back the lives of individuals who died due to the opioid pandemic, but this “historic agreement” with Walgreens ensures that the company is held accountable for the crisis that it fueled.
Under the deal, the city will receive $230 million from Walgreens over the course of 14 years, with the vast majority coming in the first eight years, and the city expects to receive approximately $57 million by June, according to Chiu.
Chiu also noted that over the course of the litigation, the city has secured more than $350 million in cash payments, benefits, and fees from the opioid industry to go toward opioid abatement and overdose prevention in San Francisco.
Co-lead trial counsel for the city, Elizabeth J. Cabraser of Lieff Cabraser Heimann & Bernstein LLP, added that the trial and Judge Breyer’s decision have had a “ripple effect” in opioid litigation across the country, spurring more defendants to negotiate and catalyzing other multimillion-dollar settlements nationwide.
The city of San Francisco said in a statement Wednesday that it also expects to receive funds from the bankruptcy estates of Mallinckrodt Pharmaceuticals, Purdue Pharma and the Sackler family.
San Francisco is represented by the San Francisco City Attorney’s Office, Lieff Cabraser Heimann & Bernstein LLP, Robbins Geller Rudman & Dowd LLP, Andrus Anderson LLP, Weitz & Luxenberg PC, Simmons Hanly Conroy LLC, and Levin Papantonio Rafferty.
Walgreens is represented by Bartlit Beck LLP and Gibson Dunn & Crutcher LLP.
The case is City and County of San Francisco et al. v. Purdue Pharma LP et al., case number 3:18-cv-07591, in the U.S. District Court for the Northern District of California.
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