(Reuters) - Johnson & Johnson (JNJ.N) on Wednesday lowered its previously reported third-quarter profit by $3 billion (£2.33 billion) to account for a proposed opioid settlement payment.
A framework settlement, announced on Monday, was hammered out by some drugmakers and distributors and attorneys general in North Carolina, Pennsylvania, Tennessee and Texas. The proposed deal will need broad support among all the state attorneys general and local governments that have sued the companies over the opioid crisis.
J&J, which is facing thousands of lawsuits over a variety of products, lowered its reported profit to $1.8 billion, or 66 cents per share, from $4.8 billion, or $1.81 per share, and said there was no impact to its adjusted earnings numbers.
The company said it could not predict when or if the opioid deal would be finalized.
“(J&J) has to disclose it now - and take the accounting hit. Later they can come back and adjust the impact on an actual payment/settlement on their goodwill when the actual cost of the settlement comes into focus,” Brian Quinn at Boston College Law School said.
Reuters reported last week citing sources that drug distributors McKesson Corp (MCK.N), AmerisourceBergen Corp (ABC.N) and Cardinal Health (CAH.N) have offered to pay $18 billion in cash over 18 years, while drugmaker Johnson & Johnson (JNJ.N) would pay $4 billion in cash.
The drug industry faces roughly 2,600 lawsuits brought by state and local governments, hospitals and other entities seeking to hold drugmakers and distributors responsible for the toll of opioid abuse.
Reporting by Manojna Maddipatla in Bengaluru; Editing by Saumyadeb Chakrabarty