The company announced on Friday that it will pay up to $1.2 billion to states and local governments, as well as $36 million to Native American tribes over the course of 11 years.
This settlement adds to the more than $50 billion in settlements that have been obtained by state and local governments in their lawsuits against players in the opioid industry. These players are accused of flooding the nation with addictive pills, despite clear signs that they were being diverted to the black market.
The intention behind these settlements is for governments to use the money to address the opioid crisis and save lives. Some of the proposed uses for the funds include purchasing drugs to reverse overdoses, strengthening addiction treatment services, and implementing educational campaigns.
Although the number of deaths from prescription-pill overdoses has decreased, the nation's addiction crisis is still ongoing. In recent years, the crisis has been fueled by illicit fentanyl produced in secret labs in Mexico and smuggled into the United States. According to federal estimates, over 110,000 people died from overdoses in 2022, with two-thirds of them attributed to synthetic opioids like fentanyl.
Numerous lawsuits have been consolidated into litigation in federal court in Cleveland. Many major drug manufacturers, distributors, and pharmacy chains named in these suits have already reached substantial settlements.
Attorneys representing states and other governments praised this settlement as the first involving regional supermarket pharmacies. They also stated that they will continue to aggressively litigate the remaining cases against regional pharmacy defendants.
Local governments in 33 states, as well as Washington D.C., have the option to participate in this settlement. Kroger operates grocery stores across the country under various names such as Dillons, Fred Meyer, Ralphs, and Smith's Food and Drug. Payments are expected to commence in December.
In Virginia, where Kroger operates Kroger and Harris Teeter stores, the state's share of the settlement could amount to $28 million, according to Attorney General Jason Miyares.
Other well-known chains like CVS, Walgreens, and Walmart have previously announced settlements to resolve thousands of opioid-related lawsuits. Rite Aid is also facing opioid lawsuits, including one from the Justice Department in the Northern District of Ohio.
Kroger, which operates over 2,200 pharmacies nationwide, did not admit any wrongdoing but referred to the settlement as a "milestone" in resolving opioid lawsuits.
This announcement comes as Kroger seeks to merge with Albertsons, another major grocery chain in the country. The deal still requires regulatory approval. Additionally, both companies announced on Friday that they are selling 413 stores to C&S Wholesale Grocers in an effort to appease antitrust regulators at the Federal Trade Commission.
In a news release, Kroger acknowledged that it expects to incur a loss of $1.4 billion during the second quarter of 2023. However, during a second-quarter earnings call on Friday, Kroger's Chief Financial Officer Gary Millerchip stated that the settlement and payments will not impact the company's ability to complete its proposed merger.
In recent months, Kroger has resolved opioid allegations with West Virginia for $68 million and New Mexico for $58.5 million. Albertsons settled an opioid lawsuit with New Mexico for $20 million last year, but is currently facing similar claims from other states; the company chose not to comment on Friday.
States have accused chain pharmacy operations of failing to identify suspicious orders of addictive pain medications. In a lawsuit filed last month, Salt Lake County in Utah claimed that between 2006 and 2014, Kroger flooded the county with over 69 million doses of hydrocodone and oxycodone pills.
Jeff Gaddy, the attorney representing the plaintiffs from Levin Papantonio Rafferty, stated that the settlement "is another step towards fulfilling our commitment to hold accountable all entities that contributed to the opioid epidemic, which has claimed numerous lives and affected far too many."
The Drug Enforcement Administration mandates that companies flag suspicious orders of controlled substances. The lawsuit alleged that Kroger acted as both a distributor and dispenser of these pills and had access to extensive data regarding suspicious orders, prescribing patterns, and patients who obtained prescriptions from multiple doctors. The suit further claimed that instead of taking meaningful action to curb the influx of opioids into communities, Kroger continued to participate in the oversupply and profit from it.
According to the lawsuit, Salt Lake County has expended millions in combating opioid abuse, including efforts to combat drug-related crime, funding treatment for individuals with opioid-use disorder, and allocating at least $50,000 for naloxone kits for law enforcement agencies.
