Welcome to the 2023 edition of my FAQs.

Unless otherwise noted, the questions and answers below derive from a recent presentation of mine for the National Overdose Prevention Network.* You can access the full recording, slides, and resources here.

What are the opioid settlements? →

What is the current status of the “national” or “global” settlement? →

Where will states’ opioid settlement spending plans differ? →

When are states actually going to be receiving funds? →

Legal Details of Opioid Settlement Funds

Is any of the funding allocated specifically to nonprofit efforts, or is it all funneled to and through the states and local governments? →

Are there tribal government settlements too? →

How do opioid settlements compare to the big tobacco Master Settlement Agreement (MSA)? →

Where can we get updates on the settlement agreements and ability to access funding at the state or local level? →

Who at the localities makes the actual decision where these monies are spent? Does it differ? How can we advocate, and to whom? →

Will the states be able to handle the large sums of funding? →

What department at the state level would typically receive and distribute the funds? →

What, if anything, will stop the federal, state, and local governments from replacing baseline spending for opioid remediation with the opioid settlement funds? →

How do states’ plans relate to the $26 billion global settlement offer made by McKesson, AmerisourceBergen, Cardinal Health, and Johnson & Johnson?

Will states be misspending their opioid settlement dollars?

Are the risks of settlement misspending real?

Why have states’ opioid spending plans taken the form of contracts and legislation?

(Thank you to NOPN, NOPLS, and PHI for inviting me to speak. NOPN is a project of PHI Center for Health Leadership & Impact. The .pdf above belongs to: © 2022, California Department of Healthcare Services.)

What are the opioid settlements?

The “national” or “global” opioid settlement typically refers to a specific thing: a $26 billion offer to settle various lawsuits by the “big three” pharmaceutical opioid distributors (McKesson, AmerisourceBergen, and Cardinal Health) and one manufacturer (Johnson & Johnson). These funds are to be divided amongst thousands of communities throughout the United States to assist in their opioid recovery efforts. But this particular agreement merely resolves litigation against those four companies; the others (e.g., Purdue, Teva, the pharmacies, etc.) sit off to the side.

What is the current status of the “national” or “global” settlement?

The master settlement was finalized on February 25, 2022, and as of publication, has been accepted by 48 state attorneys general and their subdivisions. States who managed to get their “political subdivisions” (cities and counties) to surrender their litigation and join the deal according to a particular timeline have received their first payments through the summer and fall of this year.

Where will states’ opioid settlement spending plans differ?

In almost every case, states’ plans take one of three “formats”: state-subdivision agreements (e.g., MOUs and MOAs), statutory trusts (state laws that create special opioid settlement funds), or allocation statutes (state laws that speak to state/local allocation of funds). For the full list of every single state’s publicly reported opioid settlement spending plan, visit https://www.opioidsettlementtracker.com/settlementspending.

States vary greatly across three measures: (a) state/local allocation, (b) whether they elaborate extra abatement priorities beyond Exhibit E, and (c) required reporting of opioid settlement spending.

When are states actually going to be receiving funds?

The states that originally participated in the lawsuits were set to receive funds between April and July 2022, but in some cases initial disbursements continued through the Fall.

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What is Exhibit E?

It is a 15-page list attached to the settlement documents for the two biggest opioid settlement agreements (and counting!). It is a non-exhaustive list of suggestions for how to spend opioid settlement moneys on things that qualify as “opioid remediation.” It is a “non-exhaustive list of expenditures” that acts as a guideline for how each state should prioritize its spending, which means that several states have published additional lists of priorities to identify particular subsets of interventions it would like to lift above the rest.

How is “future opioid remediation” defined?

It is the prospective “care, treatment, and other programs and expenditures designed to a) address the misuse and abuse of opioid products, b) treat or mitigate opioid use or related disorders, and c) mitigate other alleged effects of [the opioid abuse crisis.” Distributor Settlement Agreement Section I.SS. A document called Exhibit E (explained below) provides the “non-exhaustive list of expenditures” that count as “Opioid Remediation”; future opioid remediation is everything outside of the ability of states to reimburse themselves for past “opioid remediation” expenditures, as it is completely set aside for future interventions.

What, specifically, does an abatement fund do?

“Abatement fund” typically refers to a fund or statutory trust that is set aside specifically and exclusively for future opioid remediation and appropriated separately from general coffer monies.

States are required to spend 70% of their “big three” distributor and Johnson & Johnson winnings on prospective abatement interventions to help build substance use disorder (SUD) treatment infrastructure and the like, with Exhibit E providing a non-exhaustive list of interventions that would qualify. So the idea behind many of these state abatement funds is to hold this money devoted to prospective or future interventions separately from monies that can be spent with fewer restrictions.

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Is any of the funding allocated specifically to nonprofit efforts, or is it all funneled to and through the states and local governments?

Some states plan to and/or have already set up grant portals for organizations to apply to receive opioid settlement monies as grant funding, but in large part this is a hugely state-by-state question. Some states may be expected to select non-profit organizations as they always have (by directly interacting with known nonprofit organizations), others still via advisory committees, etc.

Are there tribal government receiving opioid settlements too?

The sovereignty of tribal rights has not been respected in the American legal system, and the tribal governments have often had to settle separately. Greater use of the phrase “sovereign nations” in the legal milieu and a renewed willingness to explore the (very large) deltas that exist between the definitions of tribal and state sovereignty are promising, though, given that tribal sovereign nation’s parens patriae standing was challenged quite a bit in the opioid litigation!

How do opioid settlements compare to the big tobacco Master Settlement Agreement (MSA)?

The big tobacco MSA is worth $206-246 billion, depending on the valuation, and the companies making the offer, the four biggest tobacco manufacturers in the country, were nicknamed “the majors.” (Interestingly enough, the way “the majors” loomed large then as a Goliath-esque conglomeration of defendant corporations bears some narrative similarity to media coverage of the “big three” distributors in the opioid litigation.) The states’ Attorneys General (AGs) were the plaintiffs in this case; litigation by cities and counties did not feature in the tobacco litigation nearly in the same way as it does in the opioid litigation.

States continue to receive and misspend their annually distributed proceeds from the big tobacco MSA, which omitted express contractual requirements to spend the money on public health-related causes. There weren’t protections against misspending in the big tobacco MSA that could even remotely resemble what we have built into our opioid settlements today, where states are required to spend 85% of their monies under the “national” or “global” deal with the “big three” and J&J on opioid remediation, and must in fact spend 70% on future opioid remediation, which by implication caps reimbursements for past expenditures at 15% (and also caps the slice of funds that can be spent outside of the broad definition of “opioid remediation” at 15%).

Where can we get updates on the settlement agreements and ability to access funding at the state or local level?

For information on individual state spending of settlement funds, go to the “States’ Opioid Settlement Allocation Plans” spreadsheet on my Settlement Spending page.

Who at the localities makes the actual decision where these monies are spent? Does it differ? How can we advocate, and to whom?

This differs state by state, and answers regarding exactly which entity will control decision-making and how are typically found in any published state or local spending plans. In the event of silence, we are to presume the default, which would be localities spending opioid settlement dollars in the way they’ve always dealt with public health things (typically according to whatever city and county officials would deem important enough to specifically appropriate).

Many states, though, are pursuing regional approaches, which are beneficial in cases where its many cities and counties are receiving individual payout amounts small enough to hinder long-term, strategic planning. In these cases, regional committees are often set up with representation from the cities and counties contained within that region to help decide what the funds should be spent on.

Will the states be able to handle the large sums of funding?

We are hopefully in a place where state governments are willing and able to apply the lessons learned from past settlement spending failures to improve its ability to handle these large opioid litigation-derived sums. There is consensus around the point that states did not handle the previous tobacco master settlement well; according to the Campaign for Tobacco Free Kids’ paradigmatic annual MSA spending retrospective, states famously spent just 2-3% of funds on actual treatment and prevention services proposed by the CDC, and the top three states outspent the bottom 47 states combined. These two specific outcomes — 2-3% spent on “tobacco remediation” (so to speak) and huge disparities in spending prioritization across the states — are technically prevented by the contractual protections included in our major opioid settlement agreements.

What department at the state level would typically receive and distribute the funds?

In some situations, the state portion initially sits with the state’s AG office. In most cases, the state funding would be held by the Department of Health (DOH) or the legislature itself, and ideally would be strategically passed through the state legislature to be spent across the state’s local health departments.

What, if anything, will stop the federal, state, and local governments from replacing baseline spending for opioid remediation with the opioid settlement funds?

It will largely be up to the states to enact the truly effective measures against supplantation, or the replacement of existing spending for opioid remediation with funds from the opioid settlement funds. Some states, such as New York or Massachusetts, have included additional protections in their plans to prevent against supplantation, but interestingly, the word “supplant” doesn’t appear at all in the Distributor or Janssen (J&J) settlement agreements. Their terms merely imply a suggestion against supplantation largely via its requirement that 70% of funds be spent on prospective initiatives, though policy wonks know that supplantation can occur even in circumstances where reimbursements are prohibited against as well.

What do these funds mean for your work in overdose prevention going forward?

It will really be up to us — the truly interested and often directly impacted — to make sure that these monies are actually used in the right ways. While this money is incredible, it is not a silver bullet, and we still have a long way to go. The lawyers and politicians can provide a system of spend (and sometimes hinder it); it is up to us as public health officials in overdose prevention to use our expertise to hold decisionmakers accountable!

What are the key messages that those who work in overdose prevention can use to discuss opioid settlement funds?

It will be crucial to create effective messaging that advocates for investments in evidence-based interventions expressly designed to maximize lives saved (rather than to punish or stigmatize). Depending on the jurisdiction, harm reduction can either be a no-brainer or a controversial concept that can be difficult to gain support for politically. We need to encourage those in power to put aside their biases and previous notions about harm reduction to have a logical discussion about how to use these monies to maximize lives saved.

To speak quite cynically here: We should get the message across that if city or county officials want to offset their political liabilities in the future, and if they want a good track record of spend, harm reduction is the way to go. At the end of the day, harm reduction is likely the most reliable way to ensure that our overdose prevention strategies both include evidence-informed or evidence-based set of interventions and serve the communities that need them most. Thinking a little more strategically when it comes to translating the harm reduction message isn’t dubious, and sometimes can merely involve pointing out to the right people at the right time the obvious life-saving potential of medications for opioid use disorder (MOUD) in carceral contexts, or low-barrier naloxone distribution across rural and uninsured communities.

How can we advocate for the proper use of these funds, and to whom?

Advocates will have to learn who controls the funding for the jurisdiction that they care about, and there are few better ways to do this than to read from start to finish the state’s own materials about opioid settlement spending. The “who” is discussed and available in each state’s opioid settlement spending plan, which in many states is their “MOU,” or memorandum of understanding. The majority of states have enacted these types of state-subdivision agreements, which are contracts between the state and local government that ought to describe which entity will control the various buckets of funds. All of them can be found here.

WHERE’S THE 2019-2021 EDITION?

The 2019-2021 edition of my FAQs were drafted at the outset of 2019 and may fairly be considered outdated. It is archived here. For the curious: it contains law review articley answers to questions like:

• What is the opioid litigation? →

• Why are localities and tribal sovereign nations also suing opioid corporations, in addition to states? →

• Are tribal opioid cases being treated fairly? →

• Is big pharma really to blame? Why are governments litigating their way through a public health crisis at all? →

• What were some of the key FDA failures leading up to the opioid crisis? →

• What were some of the key DEA failures leading up to the opioid crisis? →

• What is a global settlement, and why is it so hard to achieve? →

• Is there anything preventing states from spending their opioid settlement funds as poorly as they spent their big tobacco settlement funds from the 90s? →

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