When Johnson & Johnson and three major drug distributors reached a $26 billion settlement to resolve thousands of opioid lawsuits last week, one big pharma player was noticeably missing: Teva.
That’s because the generic giant hasn’t proffered as much cash as the other four companies in its potential deal, which includes $250 million in cash and $23 billion in free Suboxone, intended to help people wean off the highly addictive opioids, CEO Kåre Schultz said on Wednesday during the company's second-quarter earnings call.
Since Teva didn’t put as much cash on the table, mostly thanks to its debt load of over $20 billion, attorneys felt they could garner more lucrative fees from the other offers, Schultz said.
I think it’s fair to say the cash amount and therefore, the immediate interest from the plaintiff lawyers has been higher in the four companies than in our offer,” Schultz told analysts during the earnings call.
“That’s probably why they have decided to take the other four companies first and then move on to ours second,” he added.
Nonetheless, Teva is “optimistic” it will reach its own deal in the coming year, Schultz said. The company remains in close discussions with Attorneys General and plaintiff lawyers, Schultz said, adding that the ongoing cases “give a good incentive for all parties to reach a settlement.”
Drugmakers and distributors face more than 3,400 lawsuits alleging they’ve played a role in creating the crisis, which has killed roughly 500,000 Americans over the last two decades, according to the CDC.
In 2019, Teva, along with J&J and three of the country's largest drug distributors—AmerisourceBergen, Cardinal Health and McKesson—agreed to a deal valued at $48 billion to resolve all their opioid suits.
But those other companies, without Teva, ended up striking their own $26 billion deal last week. States will have 30 days and local jurisdictions will have 150 days to enlist in the pact. As part of that deal, J&J will fork over $5 billion over nine years, while the three distributors are on the hook for the remaining $21 billion, which will be paid over 18 years.
Teva’s Schultz said on Wednesday that since the company has “a lot less money” than those four companies, he wouldn’t be surprised if Teva ends up paying over a longer period than the initially planned 10-year timeframe. Instead, it would be more like 17 years, he said.
“I don’t expect anybody will have any benefit from trying to push us to cash payments, which are not in line with our financial situation because that will not benefit anybody,” Schultz said, arguing that Teva’s free-drug offer will better benefit Americans suffering from substance abuse.
Teva, along with AbbVie and Endo, remain the lone defendants in a high-profile case in New York that’s set to go to a jury. Teva also faces another major trial in California over allegations they downplayed risks of opioid addiction to boost sales of the powerful painkillers.
Schultz’s comments come as Teva faces a slower-than-expected rebound amid the pandemic, according to its second-quarter earnings release on Wednesday. The company reported $3.91 billion in sales over the quarter, a slim 1% increase compared with last year and missing Wall Street’s expectations.
Teva’s North American generics business and tardive dyskinesia (TD) treatment Austedo weighed down its quarterly sales. The company has now lowered its full-year outlook for the TD drug by about 10% to $850 million.
Schultz pointed to a sluggish COVID-19 recovery in Europe and North America as reasoning for fewer prescriptions, although Teva expects the pandemic barriers to lower over the coming months as the U.S. and Europe move to lift sanctions. When asked about the highly transmissible Delta variant, executives shrugged off concerns.