Stock Strategist: What Opioid Litigation Means for Healthcare Stocks

[Morningstar Logo]( [Company Site]( [Company News]( [Membership]( [Portfolio]( [Stocks]( [Options]( [Funds]( [ETFs]( [Markets]( [Tools]( [Personal Finance]( [Discuss]( Stock Strategist What Opioid Litigation Means for Healthcare Stocks It continues to inflict pain on drug manufacturers and distributors. [tab_bar] by Soo Romanoff | 9/4/2019 2:30:00 PM Across the United States, there are thousands of civil cases, mostly in state courts, represented by state prosecutors to compensate families who have been hurt by the opioid epidemic. The plaintiffs in these cases are accusing drug manufacturers of actively marketing addictive drugs and pharmaceutical distributors of failing to detect or report suspicious opioid orders. Many of the defendants in these cases are generic drug manufacturers, pharmaceutical distributors, and retail pharmacies that we cover. The three pharmaceutical distributors we cover--AmerisourceBergen [ABC]( Cardinal Health [CAH]( and McKesson [MCK]( roughly 90% of the drugs dispensed across the country. Their sophisticated IT infrastructure allows them to track and manage the supply and logistics of drugs. As a result, a key role of the distributors is to track drugs and provide copies of drug orders to the Drug Enforcement Administration. Historically, this role didn’t require policing, but in the opioid civil suits, distributors have been accused of marketing and profiting from the distribution of opioids. The prosecution teams allege that the distributors should have alerted the DEA of suspicious spikes in opioid volume, a step over and above the required reporting. Walgreens [WBA]( was included with this group as the company has a generic sourcing joint venture with and more than a quarter equity stake in AmerisourceBergen. There has been considerable speculation that the distributors are in active discussions with prosecutors with proposed financial settlements ranging from $3 billion to $15 billion for each distributor. The distributors should be able to absorb the proposed fines as long as they are spread over multiple years. To read more, click [here](. Sponsored Links [Buy a Link Now]( New: ETF Managed Portfolios Center On [MorningstarAdvisor.com]( Tap into the industry's best source of information on ETF strategies for financial advisors. See key performance data, screen for specific strategy attributes, and learn more about this fast-growing area of the investment marketplace. [Click to get started](. Free Issue | Morningstar's Stock Newsletter >> Morningstar StockInvestor is celebrating more than 10 successful years of high-quality stock investing. Its two real-money portfolios have outperformed the S&P 500 since 2001. [Get new ideas for the core of your stock portfolio]( ). Search Most Recent Articles [Let's Get Dull!]( [The Power of Compounding: Manhattan, Alaska, U.S. Stocks, and Gold]( [Smart Shortcuts for the Good-Enough Investor]( Latest Analyst Reports [Edison International]( [BRP]( [Prudential Financial]( [Lowe's Companies]( [TC Energy]( ABOUT OUR EMAIL TO UNSUBSCRIBE this email address to the Stock Strategist newsletter, please click "reply" and then click "send." This will unsubscribe only this email address to this specific newsletter. All subscription changes will take effect within one business day. Replies are not read by individuals, so please do not use this for queries about Morningstar.com. If you have questions about Morningstar.com or your membership, send a note to [joe@morningstar.com](mailto:%20joe@morningstar.com). ABOUT OUR PRIVACY POLICY Please [click here]( to learn about Morningstar's privacy policy. (c) Copyright 2019. Morningstar, Inc. 22 West Washington Chicago, Illinois, 60602 All rights reserved.