Hopes that Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and three pharmaceutical distribution companies would be able to reach a US global $50 billion settlement for alleged aggressive marketing of addictive opioid painkillers receded over the weekend. While State Attorneys were inclined to accept the deal, local government officials were opposed to the agreement, which would have seen Teva pay a reported $15 billion in generic drugs and billions more in distribution services.
AP reported that North Carolina Attorney General Josh Stein told a Cleveland Press Conference, "We’re disappointed that the cities and counties refused to go along with that deal. This would have helped the entire nation, not just a few counties, not just a few cities."
Lead lawyer for the local governments Paul Farrell told AP that one snag was that the states wanted to be in charge of dividing up the money.
Due to the failure of these talks, a trial will open tomorrow in Cleveland, Ohio involving claims by two Ohio counties, against Teva, the three major distributors McKesson Corp, Cardinal Health Inc, and AmerisourceBergen Corp., a smaller distributor Henry Schein, and Walgreens pharmacy store chain. The trial will be seen as a test case for similar opioid lawsuits throughout the US.
As a result of the failure of the talks, Teva's share price fell 3.47% on the NYSE on Friday to $7.50, giving a market cap of $8.665 billion, having risen 11.8% on Thursday on hopes that the talk would succeed.
In the second quarter of 2019, Teva made a provision of $646 million against the outcome of legal proceedings in the opioids affair. Teva said in the past that it would not agree to a settlement of the lawsuits because it did not have the cash to cover one. At the end of the second quarter, Teva had debt totaling $28.7 billion following the $40 billion acquisition of Actavis in 2016, and a declining cash flow because of generic competition with its MS treatment Copaxone.
In May, Teva and the state of Oklahoma entered into an agreement for a one-time payment of $85 million to the state. The settlement resolved the state’s claims against Teva for fueling the opioid epidemic, although Teva did not admit any wrongdoing.
Published by Globes, Israel business news - en.globes.co.il - on October 20, 2019
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