Topline: Brooklyn federal prosecutors have launched a criminal
investigation of opioid manufacturers, first reported by the Wall Street Journal, adding yet another legal entanglement
for the large corporations many have blamed for causing the
country’s opioid crisis.
·
Companies that have
received subpoenas: Teva, McKesson, AmerisourceBergen, Johnson & Johnson,
Amneal and Mallinckrodt (which disclosed its subpoena in a May investor
filing).
·
The prosecutors are
seeking to understand whether the drug companies violated the federal Controlled Substances Act for not reporting
suspicious signs that opioids were being used for nonmedical purposes.
·
According to the WSJ, the probe is in its early stages and more companies
are likely to be subpoenaed in the coming months.
·
Shares of all six
companies were trading down leading into Tuesday afternoon’s closing
bell.
·
The first federal
opioid criminal probe ended in April with Rochester Drug Cooperative Inc.
agreeing to pay $20 million to the
government, but two of its executives, charged with conspiracy, have yet to
resolve their cases.
·
In October, McKesson,
AmerisourceBergen and Teva were part of a $260 million settlement
that avoided the first federal opioid trial—one hour before opening arguments
were scheduled to begin.
Key background: Almost 400,000 Americans have died in the
opioid epidemic over the past two decades. Millions remain addicted, costing
local governments millions of dollars and creating enormous strains on law
enforcement, health providers and social services. Cities began filing lawsuits
against the drug companies in 2014. By 2019, the number of opioid lawsuits
ballooned to more than 2,500, with nearly every U.S. state filing separate
litigation as well. The total economic toll of the crisis could range from $50
billion to over $1 trillion, according to estimates.
What to watch for: Purdue Pharma (which manufactured OxyContin)
is already the subject of a Justice Department probe. The company is in talks
to resolve that probe while its owners, the Sackler family, offered a separate settlement of up to $12
billion in a civil opioid case and filed for bankruptcy in September. If the
settlement is accepted, the Sacklers will relinquish control of Purdue.
Tangent: President Trump, who has made the fight against opioids a
signature policy effort, donated his
third-quarter salary (over $100,000) on Tuesday to efforts dedicated to the
cause. Meanwhile, first lady Melania Trump was booed during a Tuesday
speech at an opioid awareness event in Baltimore.
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