The Opioid Crisis in the United States: Update on Settlements with Opioid Manufacturers, Distributors, and Retailers

The opioid crisis in the U.S. is over twenty years old. It began in the late 1990s and has changed several times.

The first wave of the crisis was caused by a sudden increase in the number of prescriptions written for a new generation of opioid pain relievers containing oxycodone. The first wave lasted until around 2010, when regulators attempted to address the problem by restricting the number of opioid prescriptions written and filled. Unfortunately, many people who developed opioid use disorder (OUD) while on prescription medication turned to illicit opioids such as heroin. This increased rates of fatal opioid overdose nationwide.

That was the second wave of the crisis, which lasted until around 2015.

Then, an influx of illicit fentanyl appeared the illicit drug supply. This increased rates of addiction and overdose around the country. Fentanyl-associated overdose increases began in the northeastern states and gradually spread to the rest of the country.

That was the third wave of the crisis, which lasted until around 2020, when the COVID-19 pandemic arrived. In truth, the third wave, characterized by a combination of fentanyl, polysubstance misuse, and an increase in rates of co-occurring mental health disorders, began around 2019. However, the circumstances of the pandemic exacerbated the opioid crisis. That’s why experts began citing the pandemic as an additional contributor to the increase in overdose deaths observed between 2020 and 2021.

To read a full account of the overdose crisis, please navigate to the blog section of our website and read this article:

CDC Report: Analysis of Overdose Deaths 2002-2021

This article will discuss a component of the opioid crisis that many people knew was happening, but most likely did not know had reached several important milestones in 2021 and 2022: lawsuits against the opioid manufacturers, distributors, and retailers that contributed to the first phase of the opioid crisis.

Big Pharma, Big Distributors, Big Pharmacies: Harm Caused by the Opioid Crisis

In 2021 and 2022, more than 3,000 state and local governments in the U.S. either filed independent lawsuits, joined collective class-action lawsuits, or settled lawsuits with manufacturers, distributors, and retail entities involved in the production and sale of the opioid medications that led to the opioid crisis.

Experts estimate the settlement amount, across all companies and suits, totals almost 50 billion dollars.

The manufacturers involved in these state-specific and nationwide settlements included:

• Purdue Pharma
• Teva Pharmaceuticals
• Endo Pharmaceuticals
• Johnson & Johnson (Janssen Pharmaceuticals)

The distributors involved in the settlements included:

• McKesson, Inc.
• Amerisource-Bergen, Inc.
• Cardinal Health, Inc.

The retail entities involved in the settlements included:

• CVS
• Walgreens
• Walmart

Here’s a brief timeline of the first round of opioid-related litigation, as published by the National Association of Counties:

2021:

• July: Defendants offer a 26-billion-dollar settlement to resolve the 3,000+ suits brought against them
• August: 46 states opt-in to the settlement offer

2022:

• January: 90% of cities and counties join the settlement agreement made between the companies and the states
• February: Settlement finalized
• May: Payments initiated
• September: Majority of states receive first payment

The first round of settlements included the distributors McKesson, Cardinal Health, and AmerisourceBergen. It also included the manufacturer Janssen Pharmaceuticals, a company owned by Johnson & Johnson. The terms of these settlements dictate the following:

Round 1: Opioid Settlements

• McKesson, Cardinal Health, and AmerisourceBergen will pay states $21 billion over 18 years.
• Johnson & Johnson (J&J) will pay states $5 billion over nine years.

The second round of settlements followed a similar timeline. The manufacturers involved included Teva, Endo, Mallinckrodt, Allergan, and Purdue Pharmaceuticals. The retail entities involved included CVS, Walgreens, and Walmart. The second round of settlements did not involve distributors. The terms of these settlements dictate the following:

Round 2: Opioid Settlements

• Teva will pay states $3.34 billion over 13 years
• Teva will provide states an amount of the overdose-reversing medication Narcan equivalent to $1.2 billion over 10 years:
  • States can choose to receive $240 million cash in lieu of the Narcan component of this settlement
• Allergan will pay $2.02 billion over 7 years
• CVS will pay $4.90 billion over 10 years
• Walgreens to $5.52 billion over 15 years
• Walmart to pay $2.74 billion in 2023, and all payments to be made within 6 years.

Paying billions of dollars in damages to the states is not the only thing these settlements require. Additional terms of these groundbreaking agreements include:

Distributors

Distributors must create a database and are required to account for and report their own shipments and the shipments of all other distributors. This will allow the detection and prevention of suspicious orders for opioid medication.

Manufacturers

Johnson & Johnson is not allowed to market, sell, or engage in lobbying related to opioids for ten years.

Teva and Allergan are banned from marketing, promoting, selling, and distributing opioids. These companies are not allowed to lobby for opioids, reward or punish employees based on opioid sales, or provide opioid sale/manufacture/distribution-related funding or grants to third parties.

Retail Entities

CVS, Walgreens, and Walmart must create new policies around opioids to ensure the safety of the public. Changes include required participation in prescription monitoring programs, enhancement of diversion prevention programs, required suspicious order monitoring/reporting, and processes to block and/or report problematic prescribers.

It’s important to note that while these settlements are enormous – and the money will help ongoing efforts to mitigate the harm caused by the opioid crisis – they’re roughly one-fifth of the $246-billion-dollar settlement arranged between big tobacco companies and states in the late 1990s. Nevertheless, the states will use the money at their discretion to help end the opioid crisis.

How Will States Use This Money?

This is the question millions of people harmed by the crisis want answered.

To ensure the funds provided by these settlements reach people in need, several non-governmental stakeholders created specific guidelines to help states, cities, and local governments distribute the payments according to terms dictated in the settlements themselves.

We reviewed the guidelines created by the Rand Corporation, the Legal Action Center, and Johns Hopkins University (JHU). Each set of guidelines is based on the settlement – therefore, they’re all similar. We condensed and summarized the version published by JHU below, as it’s most direct and accessible set of guidelines among the three we reviewed.

Here’s how JHU introduces their report, called “Principles for the Use of Funds From the Opioid Litigation”:

“Developed by a coalition of organizations across the spectrum of the substance use field including physicians, addiction medicine specialists, recovery, treatment, and harm reduction. The Principles for the Use of Funds From the Opioid Litigation provide planning and process level guidance for state and local policymakers on how to effectively spend money from the opioid settlements.”

Let’s look at these five principles now.

Principle One: Spend Money to Save Lives

The first thing the report acknowledges is financial reality. The authors recognize that this money arrives in local and state accounts at a time when almost every state and local government faces shortfalls related to the economic downturn precipitated by the COVID-19 pandemic. Therefore, they need to resist the temptation to use these millions of dollars to address holes in their budgets unrelated to the opioid crisis. Instead, it’s imperative to spend the money to save lives.

To avoid this potential misuse of funds, JHU recommends the following:

1. Establish a separate dedicated fund for the settlement payments. These funds should include rules that prevent officials from using money to replace holes in their budgets, and create a set of acceptable uses for the opioid settlement funds.
2. Ensure the funds expand and supplement existing programs rather than supplant funding that’s already there. This means each entity that receives money needs to know how much money they have already – and how they spend it – so they can avoid any confusion about which programs to allocate the new funds to.
3. Avoid spending it all quickly. In the big tobacco settlements of the late 1990s, some local governments opted for a one-time, up-front payment in lieu of payment over time. JHU recommends against this. Instead, they recommend careful planning and the responsible allocation of settlement funds over time.

Principle Two: Use Evidence to Determine Spending

As we mention above, the opioid and overdose crisis is over twenty years old. In 2023, we have substantial extensive evidence base – reviewed by medical experts, statisticians, and clinicians – to inform our collective decisions about how to spend the money meant to address the opioid crisis. For instance, a preponderance of data indicates that harm reduction approaches, including medication-assisted treatment (MAT) with medications for opioid use disorder (MOUD) is the gold-standard treatment for opioid use disorder (OUD). However, stigma still exists around this approach, and may impact the way local governments allocate funds.

The Johns Hopkins team report makes it clear that ignoring evidence can cost lives, while following evidence will save lives.

Here’s how they recommend local entities ensure they use evidence to determine spending:

1. Only support programs that are supported by scientific research and clinical evidence. In the case of new or experimental programs based on previous research, entities should provide funding to track these programs to confirm their effectiveness.
2. Change policies that prevent the implementation of new programs. For instance, some states may limit the number of methadone clinics in each county, some may prevent licensed providers from prescribing MOUDs, and others may restrict the use of telehealth to initiate participation in MAT programs. The guiding principle here is that states should work to remove barriers to care, and change any policies that are more restrictive than new federal policies related to the opioid crisis.
3. Prioritize data collection. This is essential. We’re in a new era of treatment, and all the relevant stakeholders need evidence to both evaluate past programs and assess new programs. Evidence is based on objective data. Therefore, as part of each state’s overall plan to allocate funds, each state should ensure they account for accurate and timely collection and dissemination of data related to the opioid crisis. It’s important that each entity makes data available to the public, either through regular reports or easily accessible online dashboards.

Principle Three: Invest in Prevention, Focus on Youth

When we talk about the harm caused by the opioid crisis, we almost always refer to individuals, families, and communities. While not everyone has children, it’s safe to say that children, youth, and adolescents are part of the core foundation of every community in the U.S. We build our society around giving children a safe place to learn, grow, and become thriving members of their communities. To maintain the health, wellbeing, and safety of our youth, the Johns Hopkins team advises prioritizing education and prevention programs.

Here’s how they recommend adopting this principle:

1. Only fund evidence-based programs. Data shows that early education and prevention can reduce problems associated with drug use and addiction, including low educational attainment, unemployment, unintended parenthood, and premature mortality. Evidence-based programs should work to mitigate risk factors and strengthen protective factors.
2. Verify current programs are, indeed, evidence based. A study published in 2005 showed that among elementary schools that implemented prevention programs, only 35% of schools used evidence-based programs, and only 14% said they prioritized evidence-based programs over others. Examples of evidence-based prevention programs for youth are available here and here.

Principle Four: Racial Equity

Here’s a harsh truth: our recent history is filled with examples of racism and discrimination with regards to the enforcement of drug laws and the treatment and support of people who use drugs or have a substance use disorder. Here are some basic facts:

• Black people represent 5% of people who use drug, but:
  • Make up 29% of people arrested for drug-related infractions
  • Make up 33% of people in state prisons for drug convictions
• People who grow up in communities of color face more substantial barriers to treatment and support than people who grow up in predominantly white communities

Here’s how the Johns Hopkins team recommends adopting principles of racial equity in disbursing opioid settlement funds:

1. Invest in communities negatively impacted by the social determinants of health. Each local entity should fund programs in communities of color in order to address the causes of health and healthcare inequity.
2. Eliminate existing, leftover, discriminatory policies and programs.
3. Explore alternatives to arrest and incarceration. This includes funding warm-handoff programs from hospital or potential arrest to treatment program, harm reduction programs including Narcan and safe needle exchange, and increasing funding to treatment program, with a focus on MAT with MOUD.
4. Rely on the lived experience of community members. The JHU team encourages local governments to involve current local residents in all phases of the planning and implementation of programs using opioid settlement funds.
5. Fund anti-stigma campaigns. Research shows that effective anti-stigma campaigns include: person-first language (e.g. person with alcohol use disorder rather than alcoholic), solution-focused messages rather than problem-focused messages, sympathetic narratives of people with alcohol or substance use disorder, and a focus on societal causes of addiction, rather than individual causes of addiction.

Principle Five: Transparency

As the saying goes, sunlight is the best disinfectant.

Therefore, each locality should create a “fair, transparent process for deciding where to spend opioid settlement funding.” This means local entities should enlist the input of the individuals and families who live in the communities the programs will support.

To do this, each locality should:

1. Assess and determine areas of real need. This is where data and evidence is key: leaders need to study rates of overdose and substance use disorder and focus on communities where the rates are highest and demand is unmistakable.
2. Access the experience and wisdom of diverse groups. This means enlisting the help of scientists, doctors, counselors, and other professionals with experience in the topics associated with the opioid crisis. It also means enlisting the help of people with the lived experience of opioid overdose and/or opioid use disorder, and members of any community where leaders plan to initiate programs using opioid settlement funds.
3. Involve representatives from communities of color in all stages of the planning and implementation process. In other words, if a program is going to operate in a predominantly black neighborhood, then the planning for that program must involve black people from that neighborhood. Ditto for programs that will take place in Hispanic communities or Tribal communities. If the program will operate in their community, they must be an integral part of the planning and implementation process. This is essential.

If states follow these five principles, then it’s likely we’ll see substantial change over the next ten years. Fortunately, many of the action steps above are required by the settlements. This means that in order to receive additional settlement funding, states must abide by the terms and allocate money toward “opioid remediation efforts” and “future remediation/abatement efforts.”

Takeaways: How These Settlements Help Mitigate Harm Caused by the Opioid Crisis

When we talk about support for people in need of treatment for substance use disorder (SUD), that support often requires a significant financial investment.

Why?

Support for people with SUD – and especially for people with opioid use disorder (OUD) – means more than a short-term detox followed by short-term treatment. It means investment in the root causes of addiction. This, in turn, often means investment in addressing inequities created by decades of systemic discrimination and structural imbalances in the social determinants of health.

Support means treatment. It means medication-assisted treatment (MAT) with medications for opioid use disorder (MOUD) if indicated by a clinical assessment. It means funding community education and prevention programs.

Support means helping people find and keep employment. In some cases, it means addressing food and housing instability. In others, it means addressing co-occurring mental health disorders in people diagnosed with SUD. And in still others, it means helping people in recovery rebuild relationships with their family, or helping them go back to school and finish their education, whether academic or vocational.

In the 21^st century, it means embracing the concept of harm-reduction. Twenty years of data prove the concept works.

To support our entire population and address the opioid crisis, we need to implement new programs – and shore up old programs – in all the areas we list above.

That will be expensive.

That’s how these settlements help mitigate the harm caused by the opioid crisis. Our states now have close to $50 billion dollars to allocate toward this effort and offset these expenses. That may be enough – and more is on the way. These settlements are good news, but we’ll end this article with more good news. Here’s an excerpt of a press release released by the legal team that negotiated these settlements:

“While our efforts thus far have obtained nearly $50 billion for communities nationwide, our work is far from finished, and we will continue to work to hold those responsible for this epidemic fully accountable.”

That’s good news.

For our part, we’ll continue our ongoing efforts to support people on the road to sustainable, long-term recovery. We also promise to keep an eye on two things. First, we’ll watch the way states spend the opioid settlement funds. Second, we’ll watch for any new settlements related to the opioid crisis. As soon as we have news, we’ll report it here.

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Chris Powell

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