Moody's Investors Service has said that the announcement by Teva Pharmaceutical Industries Ltd. of a proposed framework to resolve outstanding opioid litigation is credit negative because of its adverse effect on the company's earnings and deleveraging. This is primarily because of the costs Teva would incur in supplying $23 billion worth of buprenorphine naloxone tablets - a treatment for opioid dependence - for a period of 10 years, Trend with reference to Globes reports.
However, Moody's added that the cash component involved in the proposed framework is relatively modest, at $250 million over 10 years. Moody's said that there is currently no impact on Teva's ratings including the Ba2 Corporate Family Rating or the negative outlook. Leader Capital Markets research department manager Sabina Levy said that because drug companies customarily give many discounts to the drug purchasers amounting to 80-90% of the list price, or even more, the real cost of the settlement might be only $1.5 billion to $3 billion.