DATE:
April 4, 2023
TO:
Mayor and Council Members
FROM:
Nils Bentsen, City Manager
BY:
Pam Lee, City Attorney
SUBJECT:
Approval of Additional National Opioid Settlements with Teva, Allergan, Walmart, Walgreens, and CVS
RECOMMENDED ACTION
It is recommended that the Council review and adopt a resolution approving and authorizing the City Manager to carry out all necessary acts such that the City can participate in the National Opioid Settlements with Teva, Allergan, Walmart, Walgreens, and CVS, including signing necessary documents and transmittal thereof as necessary
BACKGROUND
In 2021, the City entered into settlement agreements with McKesson Corporation, Cardinal Health, Inc., and AmerisourceBergen Corporation, Johnson & Johnson, Janssen Pharmaceuticals, Inc., Ortho-McNeil-Janssen Pharmaceuticals, Inc., and Janssen Pharmaceutica, Inc. (collectively, “2021 Settling Defendants”) related to litigation by various states, cities, and counties against the manufacture and distribution of opioids and, in particular, the impact of such activities upon the national opioid epidemic (“2021 Settlement Agreements”). The 2021 Settlement Agreements required that a “critical mass” of public agencies participate in order for it to become effective, which was achieved in 2022. The City of Hesperia was not involved in the actual litigation but was able to participate as an affected party, similar to a class action settlement.
At this time, a new settlement is proposed with Teva, Allergan, Walmart, Walgreens, and CVS, who are additional defendants that are retailers and manufacturers of opioids (for the purposes of this submittal, Teva, Allergan, Walmart, Walgreens, and CVS are collectively referred to as the “2023 Settling Defendants”).
ISSUES/ANALYSIS
The terms of the 2023 Settlement Agreements are similar to the 2021 Settlement Agreements, which include: (i) the requirement of a critical mass of participation, (ii) a broad release of the 2023 Settling Defendants from liability relating to opioids, and (iii) direct or indirect payment of settlement funds to the various local agencies agreeing to participate in the settlement. Additional information about these settlements can be found here: www.nationalopioidsettelment.com.
As indicated above, the broad language of the release covers any activities by the 2023 Settling Defendants relating to opioids, such as those relating to manufacture, distribution, or sale opioids within the City.
With respect to the settlement funds, the 2023 Settlement Agreements could provide up to approximately $1.8 billion to California. This amount assumes maximum participation. Similar to the 2021 Settlement Agreements, the more local agencies that participate, the more funds will be available to California, and specifically San Bernardino County. Further, the City’s share of this amount is distributed over a 5 to 15 year period depending on the settlement agreement. However, the City’s share has yet to be determined, as it is dependent upon participation levels from other local agencies. It must be emphasized that this $1.8 billion amount is an estimate of what the State may receive and assumes a best-case scenario where all local agencies participate. As stated, the actual amount will not be known until the process has completed.
Similar to the 2021 Settlement Agreements, the use of the funds is restricted to opioid remediation (e.g., addiction treatment programs). By default, these funds are allocated to the County, but the City is able to elect to receive a direct distribution at any time, provided that the election is made at least 60 days prior to a distribution date; however, use of the funds also requires strict accounting requirements. These requirements only apply to the City if it elects to receive direct distribution and does not apply to the City if the funds go to the County. In terms of enforcement, the State enforces the expenditure requirements. Because of this, it is recommended that the funds be allocated to the County.
FISCAL IMPACT
None. Any funds allocated will automatically be transferred to the County of San Bernardino.
ALTERNATIVE(S)
Provide alternative direction to staff.
ATTACHMENT(S)
Resolution approving and authorizing the City Manager to carry out all necessary acts such that the City can participate in the National Opioid Settlements with Teva, Allergan, Walmart, Walgreens, and CVS, including signing necessary documents and transmittal thereof as necessary. 01071.0001/870293.1
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