BACKGROUND:
Since 2018, numerous states, counties and cities have been engaged in a lawsuit (National Prescription Opiate Litigation, U.S.D.C. Case No. 1:17-CV-2804) against three opioid distributors - AmerisourceBergen, Cardinal Health, and McKesson; and one of the manufacturers, Janssen Pharmaceuticals, Inc and its parent company, Johnson and Johnson (J&J).
After years of Court-supervised negotiations, the parties reached a resolution to the case. The settlements require the distributors to pay up to $21 billion and J&J to pay up to $5 billion. Roughly $2.6 billion of these settlements are expected to be directed to California and its subdivisions. With settlements reached in July 2021, each participating state had to then reach an intrastate allocation agreement to determine how to apportion and distribute the settlement funds among their entities (agencies).
These agreements were finalized by October 2021, and were contingent upon jurisdictions executing settlement agreements by January 2, 2022 – of which more than 95% of the jurisdictions did execute these agreements. In December 2021, the City of Cathedral City approved a resolution to opt-in to the National Opioid Settlement agreement. The City of Cathedral City may receive up to $1,065,338 over the next 18 years with funds paid by the distributors over the next 18 years and settlement funds paid by J&J over a seven- to nine-year period.
DISCUSSION:
There are five additional nationwide settlements with:
•Opioid Manufacturer Teva,
•Former Opioid Manufacturer Allergan,
•Walmart
•Walgreens, and
•CVS to Address Opioid Crisis
California stands to receive up to $1.8 billion in funding from these settlements.
In addition, there is a Mallinckrodt bankruptcy, an opioid manufacturer and distributor that filed for bankruptcy protection in October 2020 with court payments to public and private claimants confirmed in June 2022.
Under these settlement agreements, the proceeds received must be spent on activities to abate the impacts of the opioid crisis, such as:
•Providing matching funds for operating costs for substance use disorder (SUD) facilities;
•Creating new or expanded SUD treatment infrastructure; •Addressing needs of communities of color and vulnerable populations disproportionately impacted by SUD;
•Preventing addiction in vulnerable youth; and, among other things; •Dispensing Narcan
FISCAL IMPACT:
By joining these claims, the City may receive even more funds than originally planned.
In FY 2022/2023, the City started receiving incremental funding and has received $125,874 to date. These funds are being held in reserve and are separate from the General Fund.