In the wake of a large settlement agreement between states and opioid distributors, states need to learn from the spending mistakes made after the Big Tobacco settlement years ago.
The opioid epidemic has been raging for years, with thousands of lives lost to overdose and even more lives suffering from the impacts of addiction. In 2020, the CDC reported 93,398 people died from drug overdoses in the U.S.—roughly 30% higher than in 2019—including 69,769 of these deaths involving opioids, a 37% increase over 2019. Still, drug manufacturers, like Purdue Pharma (the maker of OxyContin) continue to deny any wrongdoing despite their introduction of highly addictive drugs and aggressive marketing which led to severe overprescribing.
On July 21, 2021, a group of state attorneys general announced a $26 billion settlement agreement ($21 billion between states and several of the largest opioid distributors—McKesson, AmerisourceBergen and Cardinal Health—and $5 billion between states and drug maker Johnson & Johnson). The funding from this settlement agreement, disbursed over the course of 18 years, must be used effectively for evidence-based interventions geared primarily towards prevention and treatment of opioid use disorders (OUDs) rather than general state revenue.
A multi-billion-dollar settlement between Purdue Pharma and states (separate from the aforementioned $26 billion settlement) would allow the company to never admit to any wrongdoing and avoid future opioid-related lawsuits.
This $26 billion settlement between the states and opioid distributors is reminiscent of the settlement with tobacco companies in 1998. In that settlement, state governments received $246 billion to restrict cigarette sales and marketing by forbidding manufacturers from targeting youth and banning specific types of media (e.g., cartoons). The settlement funds were also to be used for prevention and cessation programs. However, a 2018 retrospective assessment revealed that less than 3% of the settlement funds were used for programs to prevent kids from smoking and to help smokers quit. Particularly glaring is that no state was funding tobacco prevention at the CDC’s recommended levels at the time when the assessment was published. Smoking rates fell to an all-time low in subsequent years, but ultimately stagnated over time. The recent increased use of e-cigarettes has renewed old fears within the anti-smoking community.
Much like the 1998 settlement with Big Tobacco, the opioid settlement poses similar funding allocation risks. There are already concerns among public health experts that:
- the settlement amount is both insufficient,
- it will result in non-compliance, and
- the transparency and accountability measures included (e.g., public reporting of funds used for purposes other than opioid remediation, and ability for distributors and states to hold each other accountable) are largely self-imposed.
The settlement agreement’s primary requirement is that states use at least 85% of the settlement funds on “opioid remediation.” While this is accompanied by a non-exhaustive list of evidence-based interventions, there is extensive flexibility for states to redefine and selectively enforce their spending parameters. There is a risk that funds will be used for other state priorities, resulting in opioid remediation and health outcomes remaining stagnant or worsening.
BPC’s 2019 and 2020 reports both note significant increases in federal funding in the year immediately following the declared Public Health Emergency. But, even as opioid-related deaths and mortality rates continue to rise, funding for federal programs has now plateaued. As such, there is a critical need for “smarter spending” through more coordination between funding streams.
For the opioid settlement funds to effectively supplement federal funds, the final agreement must include more oversight on how the funds are used when combined with other opioid-focused discretionary spending, including repercussions for misusing funds. Moreover, further guidance is needed around effective spending for opioid-related programs that ultimately reduce mortality. BPC is currently evaluating the use of federal funds with our Opioid Task Force. Stay tuned as the group will provide recommendations for blending and braiding funding streams to optimize spending in an upcoming report.
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