Teva, the second largest generic pharmaceutical firm in the world by revenue, is on the brink of settling thousands of opioid claims. The terms of a countrywide settlement worth $4.25B have been finalised.
Teva was the number one corporation during its prime as it expanded through acquisitions. However, its expansion came at a cost, as its former CEO Eretz Vigodman embarked on an acquisition binge, incurring significant debt. This included the well-known $40B deal for Allergan’s generics business. As a result, the company ended up in financial difficulties, as it struggled to cope with mounting debt. It was forced to sell its plants and lay off thousands of workers. And just when it seemed like things couldn’t get any worse, numerous individual victims, as well as states, have filed thousands of lawsuits against drugmakers as a result of the opioid crisis, which has resulted in more than 500,000 deaths in the US over the past couple of decades.
As a result, during the past five years, Teva has been embroiled in litigation in a number of U.S. states, including Florida, New York, Louisiana, California, and Texas, on charges that the company contributed to the U.S. opioid epidemic by exaggerating the benefits of opioids, downplaying the risk of addiction, and failing to maintain measures to prevent opioid misuse.
The good news is that parties reached a preliminary agreement in July of this year over the financial details of a comprehensive nationwide settlement. The bad news is the amount of the proposed settlement. Teva will pay up to $4.25 billion under the provisions of the proposed statewide settlement agreement, plus an extra $100 million over a 13-year period for the Native American tribes. This total sum includes the supply of up to $1.2 billion of Teva’s Narcan, a generic version of naloxone hydrochloride nasal spray, which is used in the treatment of opioid toxicity.
“Given the high participation rate in other nationwide opioids settlements—and Teva’s settlements with Texas, Florida, Louisiana, Rhode Island, West Virginia, San Francisco and New York—we remain optimistic that a high participation rate in this nationwide settlement will be achieved,” Teva said in a statement on Tuesday.
The settlement comes at a pivotal time for the company, which is targeting a return to growth by 2027 and recently appointed a new chief executive officer, former Sandoz CEO Richard Francis, whose tenure will begin on January 1.