Fremont City Council Meeting: 06/06/23 07:00 PM
3300 Capitol Avenue Div/Dept: Human Services Department Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors: Director Suzanne Shenfil
COUNCIL STAFF REPORT (ID # 4893) DOC ID: 4893 A
Updated: 5/31/2023 8:37 PM by Susan Gauthier A Page 1
NATIONAL OPIOID SETTLEMENT FUNDS – Authorize the City Manager to Execute Participation Forms and State Agreements Related to National Opioid Settlements; Ratify Documents; Accept and Appropriate Settlement Funds for the Provision of Prevention, Intervention, Treatment, and Harm Reduction Services to Address the Impact of Opioids on Youth and Adults in Fremont; Make Findings of CEQA Exemption
Contact Persons:
Name: Annie Bailey Rocio Fierro
Title: Youth and Family Services
Administrator
Senior Deputy City Attorney II
Div/Dept: Human Services Department City Attorney's Office Phone: 510-574-2111 510-284-4033
E-Mail: [email protected] [email protected]
Executive Summary: The purpose of this report is to enable the City to use funding from National Opioid Settlements to support outpatient Adolescent Substance User Disorder (SUD) services for City of Fremont and education on the potentially harmful impacts of Opioid drugs for people of all age groups. These services will include prevention, harm reduction, treatment and public awareness programming specifically related to Opioids.
BACKGROUND: In order to be eligible to receive opioid mitigation funds, local governments must opt into the national opioid settlements, register with settlement administr ators to receive information and documents related to the settlements, and execute participation forms and State Subdivision Allocation Agreements (“State Agreements”). The City has opted into several national settlements from which funds have started to be distributed to the State and participating cities.
2021 National Opioid Settlements. On July 21, 2021, a $26 billion offer to settle was made by opioid manufacturer Janssen Pharmaceuticals, parent company of Johnson & Johnson (“Janssen”) and the “big three" distributors McKesson, AmerisourceBergen, and Cardinal Health (the “Distributors") to resolve their liabilities in over 3,000 opioid crisis - related lawsuits nationwide (collectively, the “2021 National Opioid Settlements”). The City opted into these settlements by the required deadline of January 2, 2022, thereby securing its eligibility to receive funding. To date, the City has received $70,746.22 from the Janssen settlement and $121,815.39 from the Distributors settlement.
2022 Mallinckrodt Bankruptcy Opioid Settlement/NOAT II Trust Fund. On October 12, 2020, Mallinckrodt plc, a pharmaceutical company engaged in the development, manufacturing, and marketing of pharmaceutical products, including opioids, and certain of its affiliates commenced bankruptcy proceedings in the U.S. Bankruptcy Court for the District of Delaware to, among other things, address their opioid liabilities. In connection with the bankruptcy filing, Mallinckrodt entered into a Restructuring Support Agreement (“RSA”) with the Attorneys General for 50 States and Territories and deposited the settlement funds into the National Opioid Abatement Trust II (“NOAT II”). On December 22, 2022, the California Attorney General filed a State Agreement in the Council Staff Report (ID # 4893) Meeting of June 6, 2023 Updated: 5/31/2023 8:37 PM by Susan Gauthier A Page 2
bankruptcy case under which cities can receive settlement funds. To date the City has received $9,741 from the NOAT II abatement trust fund.
2022 National Opioid Settlements. In late 2022, settlement agreements were announced with three pharmacy chains - CVS, Walgreens, and Walmart and two additional manufacturers - Allergan and Teva (collectively, the “2022 National Opioid Settlements”). In January 2023, each of the pharmacy chains and manufacturers confirmed that a sufficient number of states had agreed to the settlements to move forward. The City opted in by the deadline of April 18, 2023. To date, no funds have been received by the City.
DISCUSSION/ANALYSIS: Participation in National Opioid Settlements entitle the City to receive funds for opioid remediation and other allowable activities which benefit the Fremont community. State Agreements govern the allocation, distribution, use and reporting of funds allocated to cities, and the City is working with state agencies and Settlement Administrators to ensure compliance with all the participation requirements.
Most settlement funds may be used only for opioid abatement, including prevention, intervention, treatment, education, and recovery services. For instance, a city or county could use the funds to support clinics or services treating opioid use disorder, hire or train behavioral health workers, finance pre-trial services that connect individuals with recovery and treatment programs, and educate and train first responders on practices and precautions when dealing with fentanyl and other drugs.
For the past ten years, Alameda County Behavioral Health (ACBH) has contracted with the City’s Human Services Department to provide outpatient Adolescent Substance Use Disorder (SUD) services for City of Fremont and the Tri-city area. The opioid settlement funds will help to support the SUD program and services that specifically address the impact of the Opioid epidemic on youth, adults and community members. Focused opioid prevention, harm reduction, and intervention will be possible with this additional source of funding.
Additionally, the City intends to provide education and prevention programming in partnership with Fremont Unified School District and Newark Unified School District, as well as outreach, training and public awareness campaigns to reach the general community, including seniors.
The greater the level of subdivision participation, the more funds will ultimately be paid out to the State and participating cities. Therefore, the total amount of funds that will be received by the City from each settlement is unknown at this time and depends on the levels of participation maintained by cities and counties throughout the payment periods.
For example, the Distributors’ settlement fund will pay $21 billion over 18 years and the Janssen fund will pay $5 billion over 7 years. Therefore, it is likely that the city’s allocation will fluctuate over time.
FISCAL IMPACT: There is no impact to the General Fund. Program costs associated with this funding will be included in the 2023/24 adopted operating budget. The Settlement participation agreements assume that funds are expected to be an ongoing annual source of revenue for multiple years.
Council Staff Report (ID # 4893) Meeting of June 6, 2023 Updated: 5/31/2023 8:37 PM by Susan Gauthier A Page 3
City of Fremont - Opioid Settlement Participation
Settlement
Amount
Received
2021 National Opioid Settlement – “Distributor” $70,746.22 2021 National Opioid Settlement – “Jansen” $121,815.39
2022 Mallinckrodt Bankruptcy - National Opioid Abatement NOAT II $9,741.00 2022 National Opioid Settlement - CVS, Walgreens, Walmart, Et Al TBD Total: $202,302.61
ENVIRONMENTAL REVIEW: The action is exempt from review under the California Environmental Quality Act (CEQA), each as a separate and independent basis, per CEQA Guidelines Section 15378(b)(4) - creation of government funding mechanisms or other governmental fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment and CEQA Guidelines Section 15061(b)(3) - activities that cannot possibility have a significant effect on the environment, either directly or indirectly.
ATTACHMENTS: None.
RECOMMENDATIONS:
1. Find the action is exempt from review under the California Environmental Quality Act (CEQA), each as a separate and independent basis, per CEQA Guidelines Sections 15378(b)(4) and 15061(b)(3).
2. Authorize the City Manager or designee to execute new participation forms and state agreements related to National Opioid Settlements and to ratify agreements and documents previously executed.
3. Accept and appropriate $202,302.61 and future funding that may become available from opioid settlements for the provision of prevention, intervention, treatment, and harm reduction services to address the impact of opioids on youth and adults in Fremont.