Iowa to receive millions from opioid settlements; sues tobacco companies over 1998 deal

A former opioid manufacturer and a pharmaceutical company that acquired a portion of its business in 2016 have agreed in principle to pay up to $6.6 billion in a settlement with a dozen states, including Iowa, state Attorney General Tom Miller says.

Miller also announced he is pursuing legal action to enforce a prior settlement of a lawsuit against several tobacco companies.

Iowa and the other states accused Allergan, now part of AbbVie, of downplaying the risk of addiction in its Norco- and Kadian-branded and generic opioids, and failing to take sufficient action to prevent the drugs, intended for chronic pain patients, from being diverted to illegal trade. It will pay $2.37 billion, Miller's office said in a news release.

Teva acquired Allergan's portfolio of opioids — some of them containing the powerful drug fentanyl — when it bought Allergan's generics division, Actavis. It will pay up to $4.25 billion in a separate settlement.

From 2017:Iowa expands investigation into prescription-drug companies' roles in addiction epidemic

The agreement also involves attorneys general from California, Illinois, Maryland, Massachusetts, North Carolina, Pennsylvania, Tennessee, Texas, Vermont, Virginia and Wisconsin. Other states will have the option to join the agreement, according to a spokesperson for Pennsylvania Attorney General Josh Shapiro.

New York reached a separate settlement in December.

"We've worked hard to get the best result for Americans harmed by the opioid crisis, and it's rewarding to take another step in the right direction," Miller said in a statement. "We continue to make it a priority to hold manufacturers responsible, while ensuring victims of this epidemic receive the help they need.”

Previously:Iowa will use $3.8 million from opioid settlement to improve addiction treatment

A spokesperson for Miller said Iowa's share of the settlements has not been determined. In similar, previous multistate opioid settlements, Iowa's share has been a little less than 1% of the total, which would amount to about $60 million from the latest settlements.

Teva spokesperson Kelley Dougherty declined to comment.

The opioid addiction and overdose epidemic has been linked to more than 500,000 deaths in the U.S. over the last two decades.

Iowa saw 470 drug overdose deaths last year, up from 419 in 2020 and 350 in 2019. That includes a 64% increase in overdose deaths caused by opioids, of which fentanyl is becoming a much larger share, Gov. Kim Reynolds said in a July news conference.

Drugmaker Johnson & Johnson finalized a $5 billion settlement earlier this year. National drug distribution firms AmerisourceBergen, Cardinal Health and McKesson reached one worth $21 billion. OxyContin maker Purdue Pharma is trying to persuade a court to let it move ahead with a deal that could include up to $6 billion from members of the Sackler family, owners of the company.

Miller: Tobacco companies underpaying state under 1998 deal

Such large settlements can take years or decades to play out, and on Thursday, Miller's office announced it is taking action against 18 tobacco companies for allegedly trying to cheat on the terms of a 24-year-old settlement.

Under the 1998 Master Settlement Agreement, the companies agreed to pay billions of dollars annually to states, while the states in turn committed not to sue the companies for public health damages to their citizens. The companies, Miller alleges in the new filings, have sought to improperly reduce their annual payments to Iowa and have underpaid their true obligations by more than $130 million.

According to the complaint, the companies have filed annual disputes claiming that certain clauses in the settlement reduce their financial obligation to Iowa. The state has then had to separately arbitrate each year's payment.

Iowa has prevailed in every dispute to date, but the arbitration process takes more than a year, creating what the complaint calls "an ever-increasing backlog of disputes." One example: A dispute over the 2004 annual payment was resolved by an arbitrator in September 2021, and even then, the companies have refused to pay until similar disputes with other states have been resolved.

The total withheld from Iowa, as of April, was more than $133 million, with more than 15 pending disputes awaiting arbitration. Each round of arbitration costs the state $3 million to $4 million.

Previously:State of Iowa at war with tobacco companies over $110 million in payments

"After 17 years of these interminable disputes … it has become clear that the defendants have assumed total control over which states get paid, how much, and when," Miller's office alleges in court filings.

"We have fought, and won, these legal battles for years, and there is no end to these disputes in sight,” Miller said in a news release. “We now must escalate the matter and force the tobacco companies to pay what they owe the state of Iowa.” 

His office argues in court filings it is entitled to all the money withheld by the companies, as well as three times the amount of actual damages under the Iowa False Claims Act. According to the news release, the state of Montana recovered $100 million in a similar lawsuit filed in 2020.

Since 1998, the state has received $1.41 billion under the original settlement agreement.

The Associated Press contributed to this article.