States are flush with opioid settlement money. We don’t know much about how they’ll spend it

 

By Shalene Gupta

In response to the opioid crisis, a multitude of states, tribes, and government localities sued the major manufacturers of opioids. In early November, CVS, Walgreens, and Walmart agreed to pay $13.8 billion in opioid settlement money, bringing the current total of such settlements to upwards of $54 billion. Now, the open question is how states are going to spend the money.

The answer is complicated and murky. The money comes from thousands of lawsuits (each with different spending requirements)—most notably a $26 billion settlement from manufacturer Johnson & Johnson and the “big three” distributors McKesson, AmerisourceBergen, and Cardinal Health; between $5.5 and $6 billion is expected from Purdue Pharma (still being reviewed by an appellate court); with remaining funds coming from other manufacturers sued for their contributing roles in the opioid crisis. States are receiving different size settlements, dependent on the multitude of lawsuits brought, and have the leeway to determine how to allocate funds.

Many fear a repeat of the tobacco settlement of the late 1990s, where less than 3% of a $246 billion settlement paid out went to help cover smoking-related healthcare costs and smoking-cessation programs. Instead, most of the money went toward building roads, legal fees, and, infamously, subsidizing tobacco farmers

Fast Company spoke to Christine Minhee, founder of OpioidSettlementTracker.com, to understand how the funds are being spent. Minhee, an attorney by training, started tracking the opioid settlement funds shortly after graduating from University of Washington School of Law with the support of a Soros Fellowship.

States are flush with opioid settlement money. We don’t know much about how they’ll spend it | DeviceDaily.com
Christine Minhee

The transcript has been edited for clarity.

Fast Company: These settlements obviously represent a big infusion of money for states, but what strings are attached? How are the state spending agreements structured?

Christine Minhee: In order to avoid a repeat of the tobacco situation public health best practices in 2018 stated with the opioid settlements that are coming up that these monies need to sit in a special statutory trust. This trust is separate from the general coffers so that they can be devoted to abating the opioid crisis. 

The $26 billion settlement agreements say that state governments get to keep 15% for themselves, pass on 15% to localities within the state, and the remaining 70% you put in a special fund which you only spend on abatement. But if a state looks at that and says, “That’s not politically feasible for us,” they can wiggle away from that. An overwhelming majority of states wiggled away from this 15/15/70 break down. It gets very confusing: North Carolina has said 85% will go to localities, and Nebraska has said the opposite.

Attached to the $26 billion deal is a document called Exhibit E—a menu of items that count as opioid remediation such as treatment programs, recovery services, and prevention programs. 

States have a tremendous amount of discretion here but there are restrictions. With the $26 billion deal they have to spend at least 85% of their pie on opioid remediation. This is broken down into 70% of that must be on future opioid remediation, and only 15% for administration and reimbursements. So that leaves a remaining 15% outside of the 85% earmarked for opioid remediation for [potential] spending on roads and non-opioid remediation things.

FC: Do you have a sense of which private companies—including digital health companies—could end up receiving money?

CM: This is tricky to track down because we’re in the early days of spending and no clear trends have emerged yet. One example of a company that’s doing a good job of getting opioid settlement funds is Pear Therapeutics. Technically they are covered under Exhibit E as a pilot program [but] why is a startup with an untested product getting millions of dollars?

My dream is that companies like Pear would be hosting workshops and sessions to share their techniques with harm reduction organizations and nonprofits: they are strategic and well resourced. It’s up for debate whether or no their product is good—but they are very effective at getting funds. Why not share these best practices with organizations who are less resourced?

FC: What do you think we can do to make sure the funds are spent most effectively?

CM: Accountability. Sunlight is the best disinfectant. The fact that I went to law school informs my answer. You can argue that our opioid crisis is a public health scrouge created by big pharma or a preventable crisis that could have been mitigated had government done a better job (or both!). 

If states and localities are forced to publish their specific expenditures, they’ll stand up straighter as they spend it since they’ll be subject to public scrutiny and save more lives. 

However, reporting requirements are paltry now. With the $26 billion settlement, if you spend it on nonopioid remediation stuff, you have to report that up to settlement administrators. But you’re not required to report it to the public, which is shocking. 

The $5.5 billion from Purdue does need to be reported to the public, but that’s a much smaller slice of the pie than the $26 billion. 

FC: What do you think are the most effective ways of spending the opioid money?

CM: I’m a student of state governments and as such my authority isn’t really situated in particular interventions. However, harm reduction is a great solution to offset political liabilities in the future. It’s the most effective way to comply and make sure money is spent on evidence-based solutions and that the funds reach communities who need it most. 

I do have a full appreciation that harm reduction can chafe depending on the political context of the state you’re in. For example, I’m in Seattle. Harm reduction seems like an obvious choice here. Not so much in Texas. But if you think about it practically, harm reduction is the best way to maximized lives saved as opposed to abstinence education. 

FC: What are your biggest concerns about the future?

CM: The sky that is falling is we are going to have a rudimentary understanding of how states spend funds. We have a decent amount of information on how this problem was created, but we have a dearth of information about how states are spending the money. It’s not too late to require states impose reporting requirements on themselves because people are going to be concerned and curious about how the money is spent.

Fast Company

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