On September 4, 2021 AmerisourceBergen (NYSE: ABC), Cardinal Health (NYSE: CAH) and McKesson (NYSE: MCK) reported that, under the previously announced proposed settlement agreement and process designed to resolve the opioid claims of state and local governmental entities, they have determined that enough states have agreed to settle to proceed to the next phase (Press release, Cardinal Health, SEP 4, 2021, View Source [SID1234591442]). Under the proposed settlement agreement and process, all U.S. States, territories, and Washington DC were given 30 days to join the settlement, except West Virginia which settled previously with the companies. As of August 21, 2021, 42 out of 49 states, all 5 territories and Washington DC had affirmatively signed on to the agreement.
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This next phase is notice to the subdivisions, and the subdivision sign-on period. During this phase, each participating state will offer its political subdivisions, including those that have not sued, the opportunity to participate in the settlement for an additional 120-day period, which ends January 2, 2022. After the conclusion of the political subdivision sign-on period, each company will independently determine whether a sufficient number of political subdivisions have joined for the settlement to proceed to implementation.
If the conditions are satisfied, the settlement would become effective 60 days after the distributors determine that there is sufficient participation to proceed. During this 60-day period, the participating states and the distributors would cooperate to obtain consent judgments in each participating state embodying the terms of the settlement. The companies will make their first annual settlement payment into escrow on or before September 30, 2021, and the payment will be disbursed following the effective date or returned to distributors if the settlement does not become effective. The final payment amount will depend on several factors, including the final participation rate of states and political subdivisions.
The companies believe that this settlement framework will allow them to focus their attention and resources on the safe and secure delivery of medications and therapies while expediting the delivery of meaningful relief to affected communities.