As state and local governments consider how to spend proceeds from settlements with opioid makers, a coalition of medical societies and advocacy groups is urging public officials to create dedicated funds to help people with substance use disorders, rather than fix holes in their budgets.
The admonition comes as lawsuits proceed in different courts around the U.S. involving numerous state, county and city governments, and tribal nations, which have filed some 2,600 lawsuits against drug companies, wholesalers and retailers. The eventual value of the proceeds from all this litigation will amount to tens of billions of dollars in cash and donated products.
However a deal is decided, such a large sum would be a notable payday for local governments that have seen their budgets stretched thin by the Covid-19 pandemic. For this reason, members of the coalition say they’re concerned that government officials may repeat the mistakes made following the 1998 settlement of tobacco litigation that spawned a $246 billion payout over 25 years.
In fiscal year 2021, for instances, states were projected to collect $26.9 billion from the settlement and tobacco taxes. But they will spend just 2.4% of those funds – or $656 million – on programs to prevent children from smoking and help smokers quit, according to a December 2018 report released by the Campaign for Tobacco-Free Kids and several other organizations.
“As states, counties, and municipalities begin receiving funds from entities that exacerbated America’s opioid overdose crisis, it will be critical for decision makers to use that money wisely,” said Paul Earley, president of the American Society of Addiction Medicine, one of the members of the coalition. “To make the most of this opportunity, state and local leaders should invest in evidence-based approaches to prevent and treat addiction, promote racial equity, and save lives.”
The coalition issued principles suggesting local governments use medical evidence generated by the opioid crisis to guide spending decisions, which should include programs that support young people and their families. The coalition members also maintained the process should be guided by public health leaders and clinicians, along with people affected directly by the crisis and their families.
The issue is particularly important since the pandemic has seen a significant increase in the number of deaths due to opioid overdoses, with some states reporting increases of 30%, according to the coalition. “We are still deep in the midst of an overdose crisis,” said Joshua Sharfstein, vice dean for public health practice and community engagement at the Johns Hopkins Bloomberg School of Public Health, in a statement.
For this same reason, more government officials may be willing to reach deals. “Because the Covid pandemic has created dire financial situations for states and local municipalities, they are likely more amenable to settlements,” Jefferies analyst David Steinberg wrote in a recent note to investors. However, he added the complex nature of the litigation suggests a global resolution will take time.
Last November, a tentative deal worth $26 billion was reached with Johnson & Johnson (JNJ) and three major wholesalers – McKesson (MCK), Cardinal Health (CAH) and AmerisourceBergen (ABC). Separately, Teva Pharmaceuticals (TEVA) offered $23 billion worth of free medicines to conclude a deal. And Purdue Pharma agreed to pay roughly $8 billion to settle claims.
Among the 31 organizations in the coalition are the American Academy of Addiction Psychiatry; the American College of Emergency Physicians; the American Medical Association; the American Society of Addiction Medicine; Boston University School of Public Health; the Doris Duke Charitable Foundation; the Margolis Center for Health Policy at Duke University, and Faces and Voices of Recovery.
Other members include the National Council for Behavioral Health; the Philadelphia Department of Public Health; Shatterproof; The Opioid Policy Research Collaborative of the Heller School for Social Policy and Management at Brandeis University; The Pew Charitable Trusts; University of Southern California Institute of Addiction Sciences; Vital Strategies and the Yale Program of Addiction Medicine.