California announced a tentative settlement agreement Friday with a pharmaceutical company over its alleged role in perpetuating the opioid addiction crisis battering the state — the same company Gov. Gavin Newsom is partnering with to produce lower-cost opioid overdose reversal drugs.
That means the state could hand any funds it receives from the settlement right back to the company for the overdose reversal drugs it is partnering with the company, Amneal Pharmaceuticals, to produce.
Newsom announced the partnership with Amneal Pharmaceuticals on Monday. Through California’s contract with Amneal, the state will soon begin purchasing the opioid overdose-reversal drug naloxone below the current market rate through the state’s prescription drug label, CalRx.
California has been distributing naloxone to police, community organizations and counties to combat the state’s opioid overdose crisis through the Naloxone Distribution Project since 2018. Much of the funding for the project comes from the state’s opioid settlement fund, which consists of money paid to the state by drugmakers and distributors accused of perpetuating the opioid addiction crisis.
On Friday, Attorney General Rob Bonta announced Amneal Pharmaceuticals could join the list of drugmakers paying into that fund. The company has agreed to pay up to $272.5 million to states, including $92.5 million in cash and $180 million worth of naloxone. Bonta, in coordination with a group of state attorneys general, accused Amneal of failing to monitor and report suspicious use of its generic opioid drugs in violation of federal law.
“Today, I am thinking of the countless families and communities impacted by the opioid epidemic. I can’t begin to imagine the immense pain they have been through,” Bonta said in a statement announcing the settlement. “Today’s announcement builds on our efforts to heal our communities and respond to this epidemic from all angles, from recovery services to resources on prevention and treatment.”
Amneal sold nearly 9 billion opioid pills between 2006 and 2019, according to New York Attorney General Letitia James’ office, which also helped negotiate the settlement.
Amneal has not admitted to wrongdoing as part of the settlement and has agreed to pay it out over 10 years. If finalized, the settlement “resolves substantially all opioid litigation” against the company, Amneal’s Chief Financial Officer Tasos Konidaris told investors on a Friday earnings call.
Spokespeople for Newsom did not respond to a question about whether California would receive cash from the settlement and send it back to Amneal under its naloxone contract, and instead referred the Chronicle to the Department of Health Care Access and Information, which oversees CalRx.
Andrew DiLuccia, a spokesperson for the department, told the Chronicle in an email that the contract with Amneal “represents a groundbreaking deal that will enable California to scale its naloxone distribution and save more lives.”
“During the vetting process for a Naloxone Access Initiative partner, CalRx became aware that like many large generic pharmaceutical companies, Amneal Pharmaceuticals was named in some opioid litigation,” he wrote. “In making its decision to select Amneal for the naloxone program, CalRx prioritized factors such as price, time to market, and ability to meet the anticipated volume demands in California — understanding that more efficiency means more lives saved.”
California has agreed to pay Amneal $24 for a two-pack of naloxone nasal spray, a generic version of the brand-name drug Narcan. That’s about 40% below the $41 California has been paying for Narcan.
Newsom and lawmakers previously approved more than $150 million from the opioid settlement fund to purchase and distribute naloxone from 2023 through 2027.
Last year, California’s Department of Health Care Services spent $75 million on Narcan, according to state purchasing records. In the state budget passed last year, Newsom and lawmakers agreed to spend another $35.8 million on naloxone in the 2024-25 fiscal year from the opioid settlement fund. Newsom and lawmakers are still hammering out details of next year’s state budget, including how to deal with a huge deficit, meaning the precise amount of money that will be spent on naloxone could change.
California will begin purchasing the new, less expensive naloxone from Amneal next month, said Rodger Butler, a spokesperson for the California Health and Human Services Agency.
Dr. Mark Ghaly, who leads the agency, said that unlike a typical contract to buy a drug already being produced by a pharmaceutical company, California pursued its agreement with Amneal while it was still developing its generic naloxone. That allowed the state to use its huge purchasing power as the home to nearly 40 million Americans to negotiate a lower price and secure a significant supply up front. Ghaly said that California’s early commitment to purchase a large quantity of Amneal’s naloxone may have helped bring the drug to market sooner.
In Amneal’s earnings call, CEO Chirag Patel called the partnership with California a “great win for us.” He and co-CEO Chintu Patel described the drug as a big potential money-maker for the company.
“As we continue to grow larger, Amneal is leading a new era of affordable medicines and having a significant societal impact. Nowhere (is) our commitment to this mission more evident than our recent approval of naloxone,” Chirag Patel said, according to a transcript of the call. “Opioid overdose remains a US public health care emergency… We are so proud that this essential life-saving medicine is made in America and manufactured here in New Jersey by Amneal.”
Chintu Patel said he believes the company’s settlement agreement “does not really impact” the market for its naloxone.