Sunday, 8 January 2023

Does the opioid settlement foreshadow the tobacco settlement?

Last month the B.C. Supreme Court gave its stamp of approval to a settlement reached earlier in 2022 among all Canadian provinces and Purdue Pharma to resolve the governments' claims over wrongful actions in the selling of opioids. Until the full text of that settlement is made public, this ruling provides the greatest detail on what the provinces were willing to accept to release Purdue Pharma from further responsibility for its marketing of Oxycontin.

Although provincial governments were collectively claiming CAD $85 billion (US$67 billion), they settled for $150 million. Two additional non-monetary elements were included in the settlement, according to the court ruling: "limited-scope documentary disclosure and access to interview a set number of Purdue Canada’s senior commercial employees."  Once remaining legal issues are resolved and the settlement is fully finalized, Purdue and those employees who acted wrongfully will walk free:  "In exchange, the Canadian Governments release all claims against Purdue Canada and certain related persons."

Governments were suing to recover the health care and public costs associated with the opioid use that resulted from Purdue's wrongful marketing. They were not the only ones seeking damage:  individuals who had become addicted were represented in class action claims filed across Canada. Purdue's offer was accepted by lawyers representing these injured people, and last fall an important court approval of that settlement was also given. 

To these injured individuals, Purdue agreed to pay a total of  "$20 million, inclusive of all interest, taxes and costs, to compensate the approved claimants, the claims of the [Provincial Health Insurers], class counsel legal fees and disbursements, and any honorariums to representative plaintiffs." Of that amount, $4.65 million has been approved as lawyers' fees. Important to note, that  no money has yet been paid to any individual.  

Purdue was only one of 3 dozen defendents in the provincial claims for opioids. The provincial actions against the other manufacturers and distributors continue, and at least one other defendant (Roxane) has settled. Some of the other defendant companies have also settled some class actions. 

Same same, but different

While the Opioid settlement resulted from a more recent claim and a faster resolution, there are a number of parallels between it and the current tobacco settlement:

  • same issues: both involve the wrongful marketing of an addictive and harmful drug
  • same structure: both involve multiple government claimants and multiple corporate defendants
  • same legal authorities: both used near-identical legislation to pursue aggregated claims (for example B.C.'s 2020 Tobacco Damages and Health Care Costs Recovery Act and its 2018 Opioid Damages and Health Care Costs Recovery Act)
  • similar mediation: both mediated negotiations were catalyzed by bankruptcy protection
  • same sharp elbows: both involve competition for damages between individuals who were harmed by the companies' behaviour and the government which covered their health care costs.
  • same team players: both the opioid and tobacco claims engaged the same private lawfirms and justice department individuals.
  • same lack of transparency: both sets of claims involve important public policy issues resolved under litigation privilege instead of democratic transparency. 
  • same narrowness of focus: both sought to resolve the wrongful behaviour through financial remedies, and neither process aims to establish changes to conduct to prevent a re-occurance of harm. 
Where the manufacture, marketing and supply of these two addictive and harmful substances differ is in scale. The Canadian Institute for Substance Use Research (CISUR) and the Canadian Centre on Substance Use and Addiction estimate that in 2017 tobacco use cost the health care system 13 times more than opioids ($6.1 billion vs. $439 million), and that the total economic burden of tobacco is twice that of opioids ($12.3 billion vs. $6 billion). 

Not only is the economic burden of opioids less, the share of the burden that is imposed on governments (and not individuals or the economy) is smaller.  Two thirds of the economic burden of opioid use is not directly related to government expenditures, but is measured as lost productivity resulting from premature death ($3.9 billion of the $5.95 billion total). 


Canadian Substance UseCosts and Harms, 2015-2017

Governments settle for fractions of pennies on the dollar - but get the lions' share

The provinces agreed to a settlement that allowed Purdue to pay less than 18 cents on each $100 of provincial claims against it ($150 million on a claim of $85 billion). 

The Purdue settlement pie was divided so that governments received 7.5 times as much as the families and individuals who were harmed.

If the same ratio were applied to the provincial claims of $500 billion against tobacco companies, less than $1 billion would be provided to governments and $117 million to class actions representing injured smokers. 

Failing to fix the policies that facilitated the harms

The opioid settlement has been criticized for the absence of accompanying policy change by federal or provincial governments. In an analysis of the settlement published in The Conversation, Daniel Eisenkraft Klein and Joel Lexchin identify the structures that will allow the recurrance of similar wrongdoing. "Unless something radically changes in how the pharmaceutical industry is regulated, there is little reason to assume a similar crisis won’t occur again."

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Links related to provincial claims against Purdue. 

December 2022 court approval of settlement with provincial government: British Columbia v Purdue Pharma Inc., 2022 BCSC 2288

Copies of the provincial statements of claim against Purdue Pharma, made available through U.S. Bankruptcy Court proceedings.


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