Pharmacy giant Walgreens will pay Baltimore $80 million to settle a lawsuit the city brought against it and other drug companies as part of an overdose epidemic that’s plagued the city for years, Mayor Brandon Scott’s office said Tuesday.
The Walgreens settlement is the city’s second legal victory in as many days and comes on the cusp of trial against other major drug companies. On Monday, Scott’s office said the city had brokered an $80 million deal with Teva Pharmaceuticals.
Unlike previous settlements, the exact terms of the agreement with Walgreens — when the money will be paid out, if there are any designated fund recipients and even the exact amount — are being withheld until Oct. 3 at the company’s request, City Solicitor Ebony Thompson said. The city was allowed to disclose the total amount of money received to date by all parties, and Walgreens’ $80 million figure was determined by subtracting the total the city had received before today’s settlement from the updated figure shared this morning. To date, Baltimore has secured $402.5 million in settlements with drug companies, including Cardinal Health, CVS and Allergan.
“In order to resolve the case against it and focus our trial on the worst actors in the opioid epidemic, we agreed to this term,” Thompson said in a news release.
The city is set to go to trial against other drug companies, including Johnson & Johnson, McKesson and AmerisourceBergen (now known as Cencora), on Monday. Officials have expressed optimism about their chances in court, but hope to resolve the case beforehand. Settlement talks are ongoing.
With Walgreens’ settlement, Baltimore continues to rake in cash at a level that would have been otherwise impossible under other agreements. The Maryland attorney general, in concert with other states and cities, reached agreements with many of the same companies that would have paid Baltimore far less than what it has received so far.
Instead, the city opted to file lawsuits against the companies independently. The move, a high-risk, high-reward play, has paid off. Officials estimate the city has received more than three times what it would have under the state settlements.
The windfall of money comes at a moment of crisis for the city. As detailed in a series of articles from The Baltimore Banner and The New York Times, overdose deaths happen in Baltimore at a rate higher than any other major American city — higher even than nearly all of Appalachia at the worst of the prescription pill crisis.
“We are proud of our efforts to bring these companies to justice over the past several years,” Scott said in a news release. “The reality is, addressing the opioid epidemic requires an enormous amount of resources and through this litigation, our outside counsel and Law Department have begun to provide that. As we approach the beginning of trial, it is time to finish the job against the remaining defendants and begin using this money to support and grow the work we’ve already been doing to tackle the opioid epidemic where it can do the most good.”
When all the legal fights are over, there’s a good chance the city will have taken in more than the $641 million it received in federal pandemic aid under the American Rescue Plan Act, officials have said. Then, they will have to spend it.
Nearly two weeks ago, Scott signed an executive order laying out spending guidelines for the funds, which are to be put into a trust that the administration has compared to a college endowment. The funds are to be spent over at least a 15-year period with a minimum of 5% to be allocated each year.
Spending decisions will go through multiple layers of review, with the mayor giving final approval.
Community organizations, health care providers and any city agency can apply for money from the trust fund, with the first allocations expected in July at the start of the next budget cycle.
While the proposed process is meant to be transparent and community-oriented, some of the money has been allocated in secret. Each of the city’s four settlements so far have included direct payments, ranging from $1 million to $5 million, to various community health organizations. Officials have declined to explain how those groups were selected because to do so could harm the ongoing settlement talks with other pharmaceutical companies.
City coffers are not the only ones being filled through this settlement. In order to take on the pharmaceutical giants, the city law department hired Susman Godfrey, a private legal firm with a reputation for winning difficult cases. While the city has declined to release the engagement letter outlining Susman Godfrey’s exact arrangement, an email from the law department shows the city is paying the firm one-third of each settlement, except for the first against Allergan, for which it received nearly half.
Under that agreement, Susman Godfrey has likely been paid more than $120 million. Arrangements with private attorneys being paid one-third of settlements or damages won at trial are commonplace in Maryland.
The second annual iMPACT Maryland conference on Oct.1 will include a discussion about The Banner’s joint investigation with The New York Times into the city’s overdose crisis. More information and tickets are available here.
