Payout From a National Opioids Settlement Won’t Be as Big as Hoped

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The manufacturers present more of a mixed bag. Johnson & Johnson, despite its swarm of legal woes, is doing fine. But several makers of generic opioids carry a lot of debt and have weak bond ratings, analysts say.

The status of Teva, which makes generic and branded drugs and has struggled with debt, is less clear. In October, the company proposed settling claims by paying $250 million in cash and donating treatment drugs — which the company estimates to be worth $23 billion — over 10 years. Critics say that estimate is wildly inflated.

Ronny Gal, an analyst at Sanford C. Bernstein, an investment research firm, said Teva’s recent earnings report suggested it could afford to pay more. “Teva will generate at least $2.5 billion in cash each year for the next five years,” he said. He estimated that it could pay $4 billion in cash “without material difficulties.”

Teva declined to comment.

Two companies that manufacture branded opioids, Insys Therapeutics, the maker of a fentanyl spray, and Purdue Pharma, are now in bankruptcy court, each struggling over restructuring plans to manage payouts, a model also being discussed as a possibility for some manufacturers.

The biggest unknown is how much the pharmacy chains can or should pay. Financially, this is the healthiest group of defendants. Their first trial, brought by two Ohio counties, is scheduled for November.

The chains are mostly being sued based on the quantity of opioids they distributed to their own pharmacies. Mr. Percher, the Nephron Research analyst, said that if the chains paid a figure proportional to what the national distributors offered, it would be about $13.8 billion.

“Could it be higher, given that they also dispensed the pills to the consumer?” he said. “Yes.”

The delay in reaching a broad agreement has been due in some measure to sharp divisions among the many constituencies of plaintiffs themselves. Thousands of local governments view the states suspiciously, bitter because Big Tobacco settlement money largely wound up being diverted to state coffers.

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