Kroger settles nationwide opioid claims for $1.2 billion

(CN) — The Kroger Co. will pay $1.2 billion to settle the majority of nationwide opioid claims, the grocer announced Friday.

The company is one of a handful of retail pharmacy chains accused of failing to control the distribution of the highly addictive painkiller drugs. Numerous government entities have filed lawsuits seeking to recoup costs associated with the addiction fallout in their communities.

Nearly 645,000 people died from overdoses involving any opioid, including prescription and illicit opioids, from 1999 to 2021, according to data from the U.S. Centers for Disease Control and Prevention.

Kroger called the settlement “an important milestone” in settling the pending opioid litigation efforts and the company remains committed to public safety.

“This settlement is not an admission of wrongdoing or liability by Kroger and Kroger will continue to vigorously defend against any other claims and lawsuits relating to opioids that the final agreement does not resolve,” the company said in a statement.

According to the settlement, along with the execution of certain nonmonetary conditions that remain in discussion, Kroger has agreed to pay up to $1.2 billion to states and subdivisions and $36 million to Native American tribes to fund abatement efforts. This will be paid over 11 years in equal installments.

States, subdivisions and the tribes will have an opportunity to opt in to participate in the settlement, and Kroger will have full discretion to determine whether there is sufficient participation for the settlement to become effective, the grocer said in a statement. If all conditions are satisfied, the settlement would allow for the full resolution of all claims on behalf of participating states, subdivisions and tribes.

Initial payments are expected to begin in December 2023. The timing of the payments over multiple years, most of which are tax deductible, results in an after-tax net present value to Kroger of approximately $870 million.

The statement added that Kroger expects to recognize a $1.4 billion charge during the second quarter of 2023, which will negatively impact earnings per diluted share of $1.54 on a GAAP basis. This does not affect adjusted earnings per diluted share results for 2023, which are provided on a basis that excludes adjustment items. 

According to its website, Kroger is the nation’s largest grocer with nearly 2,800 stores in 35 states. The 140-year-old company operates grocery stores under 28 different names, and it employs nearly half a million associates who serve more than 11 million customers every day.

This past fall, CVS Health, Walgreens Boots Alliance and Walmart agreed to pay about $13.8 billion to resolve thousands of state and local government lawsuits involving opioid painkillers.

In August 2022, a federal judge found that pharmacy giant Walgreens “substantially contributed” to the city’s opioid crisis by ignoring red flags and continuing to fill prescriptions for drugs that later flooded the city’s streets following a landmark 11-week bench trial.

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