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Ad firm Publicis, drugmaker Hikma settle US opioid cases for $500 million

Published 02/01/2024, 01:57 PM
Updated 02/01/2024, 02:01 PM
© Reuters. FILE PHOTO: A logo of Publicis Groupe is seen at its exhibition space, at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 15, 2022. REUTERS/Benoit Tessier/File Photo

By Nate Raymond

BOSTON (Reuters) -A division of French advertising company Publicis Groupe SA (EPA:PUBP) and drug company Hikma Pharmaceuticals (OTC:HKMPY) have reached separate settlements worth a collective $500 million to resolve claims that they helped fuel the deadly U.S. opioid epidemic.

The settlements announced by U.S. state attorneys general on Thursday add to the more than $50 billion that drug manufacturers, distributors, pharmacy operators and consultants have agreed to pay to resolve lawsuits and investigations over their roles in the drug addiction crisis.

Publicis Health, a subsidiary of Publicis Groupe, agreed to pay $350 million to resolve claims by all U.S. states and territories that it helped OxyContin maker Purdue Pharma devise marketing strategies to boost sales of its prescription opioid painkiller.

Massachusetts, which sued Publicis in 2021 alleging it collected more than $50 million to help Purdue get doctors to prescribe its opioids to more patients, for longer periods of time, and at higher doses, served on the executive committee of states investigating the company.

Massachusetts Attorney General Andrea Joy Campbell in a statement said the settlement would "bolster accountability and transparency for this ongoing crisis" and provide $8 million that the state can use to fund treatment and services.

Publicis denied wrongdoing, and had called Massachusetts' case an unprecedented attempt to sue an advertising agency over a manufacturer's marketing of its products. But a state court judge declined to throw the case out in October 2021.

In a statement, Publicis said $343 million of the settlement would go to the states' opioid relief effort, and the rest would cover legal fees.

It recorded a pre-tax charge of $213 million for the fourth quarter of 2023 to cover the settlement, after being paid $130 million by its insurers.

"The fight against the opioid crisis in the United States requires collaboration across industries, lawmakers, and communities, and we are committed to playing our part," Publicis said.

London-listed Hikma separately reached an agreement in principle to resolve claims by states and localities for $150 million, consisting of $115 million in cash and $35 million worth of the opioid addiction treatment medication naloxone.

Hikma said it did not admit wrongdoing. Campbell's office said the deal resolves claims that the generic drugmaker from 2006 to 2021 failed to monitor suspicious orders of opioids from potentially illegal distributors.

The company had been facing more than 900 lawsuits stemming from the epidemic, according to a lawsuit Hikma filed in September against an insurer.

Hikma said in its statement that the deal would resolve the "vast majority" of cases against it.

© Reuters. FILE PHOTO: A logo of Publicis Groupe is seen at its exhibition space, at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 15, 2022. REUTERS/Benoit Tessier/File Photo

States that do not accept the addiction treatment medication under the settlement will receive cash instead, according to Campbell's office.

The U.S. Supreme Court in December heard a challenge by President Joe Biden's administration to Purdue Pharma's multi-billion-dollar bankruptcy settlement resolving related claims against the drugmaker. A ruling is expected by June.

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