Dive Brief:
- Cencora directors have agreed to pay upwards of $111 million to settle allegations that they failed to stop the drug distributor from perpetuating the U.S. opioid epidemic.
- The lawsuit brought by pension funds accused Cencora’s leadership of ignoring red flags around how the company was dispensing the highly addictive painkillers for years — including dubiously large opioid shipments — and failing to properly monitor opioid sales.
- The settlement disclosed Friday in a filing with the Delaware Chauncery Court is Cencora’s latest financial penalty over its role in the opioid crisis. Still, it amounts to a slap on the wrist compared to the billions of dollars that Cencora has already agreed to pay to settle opioid-related litigation brought by state and local governments.
Dive Insight:
In 2021, Lebanon County Employees’ Retirement Fund and a health plan maintained by the Teamsters union sued Cencora’s directors for breaching their duty to stockholders by failing to stop Cencora from improperly distributing opioids.
Over 1 million Americans have died of overdoses related to opioids since 1999, but deaths spiked in between 2017 and 2023 as the potent painkillers became more readily available and easily misused, according to the Centers for Disease Control and Prevention.
During the epidemic, Cencora failed to “adopt, implement, or oversee reasonable policies and practices to prevent the unlawful distribution of opioids and failed to act when presented with evidence of widespread illegal opioid sales,” the pension funds argued in the Delaware suit.
In 2022, a Delaware judge dismissed the case based on a decision from a West Virginia court in Cencora’s favor in separate litigation, saying in a ruling it “knock[ed] the stuffing out of the plaintiffs’ claim[s].”
However, the Delaware Supreme Court revived the case in 2023 after the plaintiffs appealed.
Following mediation in June, both Cencora and the pension funds accepted an arbitor’s proposal that Cencora pay $111.3 million to settle the case, according to court documents. The amount was solidified in the formal settlement disclosed on Friday.
“Plaintiffs and Plaintiffs’ Counsel have determined that the Settlement is fair, reasonable, adequate, and in the best interests of the Company and its stockholders,” the settlement reads. Meanwhile, “Defendants have denied, and continue to expressly deny, each and all of the claims and contentions alleged by Plaintiffs ... Defendants are entering into this Stipulation and the Settlement solely to eliminate the burden, expense, disruption, and distraction inherent in further litigation.”
When contacted for comment, a Cencora spokesperson stressed that the settlement is to avoid further litigation and contains no admission of liability or wrongdoing.
The company, which rebranded from AmerisourceBergen in 2023, is already on the hook for billions of dollars over its alleged role in the opioid epidemic.
The company agreed in 2022 to pay $6.4 billion over 18 years as part of a nationwide settlement resolving the lion’s share of lawsuits filed against drug distributors by state and local governments. Scattershot lawsuits, such as this from the pension funds, have continued, resulting in smaller settlements. For example, last fall Cencora and two other major drug distributors agreed to pay $300 million to settle opioid-related litigation from a number of health insurers and benefits plans.
Thousands of lawsuits have taken distributors, drugmakers, pharmacies and doctors to task for their role in flooding the country with opioids. Litigation has resulted in roughly $50 billion in settlements to date.
