What is the total financial commitment for Cencora under the proposed national opioid settlement?

The proposed national opioid settlement involves a cash component where Cencora would pay up to approximately $6.4 billion over an 18-year period. The final amount is subject to several factors, including the participation rate of states and political subdivisions, and state actions to foreclose lawsuits by subdivisions.

What are the key conditions for the proposed settlement to become effective?

The settlement is conditional on two main factors: (1) a sufficient number of 'States' (including D.C. and U.S. territories) agreeing to the terms after a 30-day sign-on period, and (2) a sufficient number of political subdivisions in those 'Settling States' agreeing to the settlement after a 120-day sign-on period. A final agreement would become effective 60 days after these conditions are met.

Besides financial payments, what other significant terms are included in the settlement?

The settlement includes substantial injunctive relief provisions that will govern the company's controlled substance anti-diversion programs. These cover governance, due diligence for customers, and suspicious order monitoring. An independent monitor will oversee compliance for five years, and a third-party vendor will act as a data clearinghouse, funded by the distributors for ten years.

What is the status of the settlement with New York, and how does it relate to the national agreement?

Cencora, along with two other distributors, reached a separate settlement with the State of New York and its participating subdivisions for up to $1.179 billion. This New York settlement is consistent with the allocations under the broader national proposed settlement agreement. If the national settlement becomes effective by July 1, 2022, its terms will substantially supersede the New York settlement.

COR 8-K SEC Disclosure — Jul 23, 2021

Summary

Cencora, Inc. (formerly AmerisourceBergen) has filed an 8-K report detailing a significant proposed settlement agreement to resolve a substantial majority of opioid lawsuits filed by state and local governmental entities. This comprehensive agreement, negotiated with two other national pharmaceutical distributors, aims to provide greater litigation certainty and reduce contingency risk for the company. The settlement includes a cash component of up to approximately $6.4 billion, to be paid over 18 years, with the exact amount contingent on participation rates and other factors. In addition to the financial settlement, the agreement includes stringent injunctive relief provisions related to controlled substance anti-diversion programs, requiring enhanced governance, due diligence, and suspicious order monitoring, overseen by an independent monitor and funded clearinghouse. While this proposed settlement offers a potential resolution, it is subject to several conditions, including the agreement of a sufficient number of states and their political subdivisions, and the company provides no assurance of its finalization or that it will not undergo materially adverse modifications. Separately, Cencora also announced a settlement with the State of New York and its participating subdivisions for up to $1.179 billion to resolve opioid-related claims, which is intended to be superseded by the broader national settlement.

Key Highlights

1Cencora (formerly AmerisourceBergen) has entered into a proposed comprehensive settlement agreement to resolve the majority of opioid lawsuits filed by state and local governmental entities.
2The proposed settlement involves a cash payment of up to approximately $6.4 billion over 18 years, contingent on state and political subdivision participation.
3The agreement includes significant injunctive relief, mandating enhanced anti-diversion programs for controlled substances, overseen by a monitor and a data clearinghouse.
4The settlement is conditional upon a sufficient number of states and their political subdivisions agreeing to its terms.
5Cencora has also reached a separate settlement with the State of New York and its subdivisions for up to $1.179 billion, which will be superseded by the national agreement if effective.
6The company acknowledges that there is no guarantee the settlement will be finalized as proposed or without adverse modifications.
7Cencora will continue to litigate cases not resolved by the settlement and intends to vigorously defend itself.

Cencora, Inc. 8-K Report, Corporate Update (Jul 23, 2021)

Summary

Key Highlights

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