Specialist
Partner at Keller Asebey Life Science Law PLLC
Agenda
- Ongoing US drug distributor opioid litigation, highlighting potential impact on McKesson (NYSE: MCK), AmerisourceBergen (NYSE: ABC) and Cardinal Health (NYSE: CAH)
- Potential impact on non-pure-play distributors such as Walgreens (NASDAQ: WBA) and CVS (NYSE: CVS)
- Multidistrict litigation vs individual lawsuits
- Total payout and split between main distributors
- Six-month outlook, focusing on expected litigation timeline
Questions
1.
What key trends are you following in the pharmaceutical supply and distribution sector?
2.
Could you set the scene for opioid litigation on the distributor side? Who are the defendants, who is suing, what are the basic complaints across the spectrum, and what are the various legal processes to note?
3.
Just on the distributor side, manufacturers excluded, could you quantify the possible aggregate liability, even estimated in a best-case and worst-case scenario?
4.
How would you compare the manufacturing exposure vs the distribution exposure?
5.
Do you think the distributors are likely to settle or go to court? Is there any situation where there might be trial?
6.
What would you say is the likelihood of pursuing the multi-district litigation vs individual lawsuits, and what are the dynamics, timelines and processes involved in each?
7.
Does multi-district litigation vs the class action potential affect the overall payout per distributor? Do plaintiffs and defendants prefer one over the other?
8.
Is the percentage of responsibility that the courts account for based on a revenue figure or units? How do they determining those percentage splits of responsibility?
9.
McKesson recently announced it expects to spend USD 150m defending in state and national opioid lawsuits in 2021. Do you think that is a reasonable figure or perhaps on the low end? What goes into that estimation?
10.
We outlined the dynamics of potential exposure given more or less market participation, with McKesson at around 18%, Cardinal and AB at 10%. What other factors may influence the split of a settlement, or is it really just that market participation?
11.
Are you privy to any exposure from smaller players such as CVS and Walgreens in terms of percentages or dollar amounts?
12.
You mentioned we are at least 3-4 years away from an actual settlement figure. Do you foresee the payout structure to be a lump-sum payment or payments over time? Is the tobacco case a good proxy and it might be a longer-term payout?
13.
If there might be half upfront payments and half of it paid over time, is there any consideration from the courts around inability to pay upfront? Is that why sometimes larger figures involve a longer-term payout structure?
14.
You suggested that sometimes multiple cases or multiple litigations are needed before there is any meeting of the plaintiffs and the defendants for settlements. When would you expect a plateau or an end of the upticks of new claims being filed, before the parties begin to talk?
15.
You mentioned McKesson wanted to prove its exposure was actually less than the 18% in terms of what prescriptions were justified. What is the burden of proof? How do you determine which prescriptions were justified vs those that weren’t?
16.
How do you imagine distribution opioid litigation could potentially play out with AmerisourceBergen’s relationship with Walgreens? Is there any impact on the macro environment or an opportunity for a new distributor to enter or more consolidation?
17.
Do you have any further comments on drug distributors more broadly or the opioid liability that you think are important to mention?
18.
What is your outlook regarding this litigation and distribution liability over the next few years?
