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Drug Distributor Shares Jump After Settlement Report
By: Geoff Mulvihill | AP
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Shares of big drug distributors are climbing after a report that they have made an offer to settle litigation over the opioid crisis.
Two people with knowledge of the negotiations, which have been going on for months, confirmed to The Associated Press that McKesson Corp., AmerisourceBergen Corp., and Cardinal Health, Inc., have offered $18 billion over 18 years to settle more than 2,000 lawsuits across the country. The people spoke on condition of anonymity because the settlement talks are ongoing.
The offer was first reported by The Wall Street Journal.
Shares of McKesson, AmerisourceBergen and Cardinal advanced more than 6% after the opening bell while broader indexes slipped.
All three companies are defendants in the first federal trial over the epidemic. Jury selection in that case, which will be tried in Ohio, was scheduled to begin Wednesday.
Investors are expecting a settlement ranging from $15 billion to $25 billion over five to 10 years, Jefferies analyst Brian Tanquilut said in a research note. He added that the reported deal should be viewed positively.
Tanquilut noted that uncertainty over liability in an opioid settlement made investors reluctant to buy the stocks.
Counting prescription drugs and illegal ones such as heroin and illicitly made fentanyl, opioids have been blamed for more than 400,000 deaths in the U.S. since 2000.
That trial is considered a bellwether because it could help shape how future trials are conducted or possibly spur the global settlement sought by U.S. District Court Judge Dan Polster, who is overseeing more than 2,000 lawsuits filed by local governments and other entities against drug companies.
Five drug manufacturers, including Purdue Pharma, have already used settlements or bankruptcy filings to be dismissed from the trial.
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Associated Press Health Writer Tom Murphy contributed to this report.