National opioid settlement funds to be used for remediation efforts

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National opioid settlement funds overview: 

• Who: States and local political subdivisions are working together to end the opioid epidemic following national opioid settlements. 
• Why: States are in the process of developing strategies to allocate and/or use the funds made available to them by the national opioid settlements. 
• Where: Opioid settlements have been made with states nationwide.

National opioid settlements have been made as part of an effort by states and local political subdivisions to resolve the nationwide opioid crisis. 

The settlements have put to bed claims brought against McKesson, Cardinal Health and AmerisourceBergen — the nation’s three largest pharmaceutical distributors.

Claims against drug manufacturer Janssen Pharmaceuticals and its parent company Johnson & Johnson were also resolved as part of the national opioid settlement.

The settlements provide “substantial funds” to both states and subdivisions as a way to help abate the nationwide opioid epidemic and create change in the way drug manufacturers and distributors conduct business. 

Pharmaceutical distributors must pay up to $21 billion over the next 18 years while J&J is required to pay as much as $5 billion over “no more than nine years,” according to the official national opioid settlement website. 

Around $22.8 billion of the settlement funds will go toward state and local subdivisions while at least 85% of all the funds going to the states will be required to be used to reduce the opioid epidemic.

Drug distributors were required to make an initial deposit of settlement funds into escrow by no later than the end of September of last year while more payments were made by J&J and distributors this summer. 

Opioid settlement funds distributed differently state by state

The decision on how settlement funds will be used varies by state to state with some opting to distribute the cash to participating state and local governments working to end the opioid epidemic. 

Arizona, for example, adopted what it is calling the One Arizona Distribution of Opioid Settlement Funds Agreement to “establish binding terms” for the distribution of the settlement funds with participants. 

“The State and the Participating Local Governments share a common desire to abate and alleviate the impacts of the Pharmaceutical Supply Chain Participants’ misconduct throughout the State of Arizona,” states a document explaining the states’ fund distribution agreement. 

Additional states with allocation agreements include Virginia, Idaho, Illinois and New Mexico, among others. 

State, local governments adopt memorandum of understanding

Other states, such as Arkansas, chose to enter into a memorandum of understanding between their state, counties and cities in an effort to “establish a proposed framework for funding programs at a state-wide, regional and local levels.” 

Arkansas’ memorandum of understanding explains how both state and city officials “share a common desire” to put an end to the opioid crisis. 

Additional states that have adopted a memorandum of understanding on how to distribute settlement funds include Colorado, Florida, Georgia, Iowa, Kansas and Maine, among others. 

States pass legislation in wake of national opioid settlements

States have also proposed legislation in the wake of the national opioid settlements meant to help end the opioid epidemic. 

Georgia, for example, passed a bill designed to help the state combat the opioid epidemic by granting more funding for prevention and treatment, along with additional resources being made available to law enforcement agencies. 

The legislation will also help ensure that the state receives funds promised to them in an opioid related settlement. 

“It is imperative that the state receive the full amount of any opioid settlement, and in order to do so, the state must be able to release claims for all state and local public bodies and instrumentalities in the state,” Georgia says in a court document. 

Additional states that have passed new legislation in the wake of the national opioid settlements are Illinois, Indiana, Kansas, Kentucky and Louisiana, among others. 

Opioid distributors agree to terms in class action settlements

In May, Native American tribes agreed to a settlement worth almost $590 million with J&J and other major opioid distributors they accused of exacerbating an opioid epidemic in their communities. 

Last September, meanwhile, a U.S. bankruptcy judge said he planned to approve a bankruptcy plan made by Purdue Pharma in the face of a number of class action lawsuits accusing it of bearing responsibility for the opioid epidemic. 

By approving Purdue Pharma’s bankruptcy plan, the judge protected the pharmaceutical company from facing ongoing and future opioid-related class action lawsuits. 

In October 2020, Purdue Pharma previously agreed to plead guilty to criminal charges stemming from its marketing and distribution of the painkiller Oxycontin as part of a settlement agreement worth more than $8 billion. 

Have you been affected by the nationwide opioid epidemic? Let us know in the comments! 

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