August 19, 2025
TO: City Council
REQUESTED BY: Erika Gomez, Finance Director
APPROVED BY: Robert A. Johnson, City Manager
SUBJECT: Opt into Settlement Agreement with Opioid Distributors, Purdue Pharma, L.P. and the Sackler Family
RECOMMENDATION:
Opt into settlement agreement with opioid distributors, Purdue Pharma, L.P. and the Sackler Family, and direct the City Manager to execute any documents necessary to implement the action.
EXECUTIVE SUMMARY:
In the last few years, states and cities across the United States brought litigation against the three largest pharmaceutical distributors of opioid painkillers, Amerisource Bergen, Cardinal Health, and McKesson (the “Distributors”), and the opioid painkiller manufacturer, Janssen (owned by Johnson & Johnson) (“J&J”), which resulted in two proposed settlements totaling approximately $26 billion dollars. Between November and December 2022, five additional parties entered into National Opioid Settlements with terms identical to the Distributors/J&J Settlements.
In 2025, Purdue Pharma, L.P. and the Sackler Family (“Purdue”) reached a settlement regarding its outstanding opioid distribution claims as well. The City has opted into every previous round of opioid settlements and payments have been allocated to Riverside County.
The City can opt into this new settlement, thereby releasing its claims against Purdue, in order to receive a maximum of $30,800, paid out over a period of 15 years. The funds are restricted to certain opioid abatement/remediation uses. The City can either allow the funds to be used by Riverside County or elect to use the funds itself subject to reporting requirements to the state.
Alternatively, the City can take no action, thereby opting out of the settlement, while maintaining its right to pursue litigation against Purdue.
It is recommended that the City Council opt into the Settlement Agreement and authorize the City Manager to execute any documents necessary to implement the action.
BACKGROUND:
A. Allocation of Funds
Litigation against Purdue has resulted in a proposed settlement totaling approximately $7.4 billion. The estimated total nationwide payout and payment schedule are outlined below:
Defendant
Estimated Max Payout
(100% Participation) Years
Purdue $7,400,000,000 15 years
Of the amounts above, California is to receive approximately $440 million and is to distribute these funds pursuant to intrastate allocation agreements for the new settlement. The percentages paid out to local subdivisions that did not litigate (such as San Jacinto), but choose to opt into the settlement, comes from the share of the settlement proceeds that are placed in the California Abatement Accounts Fund. Essentially, this means that the City of San Jacinto, if it chooses to opt into the settlement, is entitled to receive a percentage share from the California Abatement Accounts Fund.
The City of San Jacinto has been allocated 0.010% of the 70% of the approximately $440 million (i.e., best case scenario), which is equal to $30,800. This total amount will be disbursed over a period of 15 years, with payments decreasing as each settlement finishes paying out. The first payments are scheduled to occur in the latter half of 2025. After the receipt of these initial payments, further payments will be received annually thereafter. As stated above, the ultimate settlement amount is not yet known because of the bonus structure built into the agreements.
The default distribution of funds in the settlement agreements provides that the funds will go directly to the county in which a city is located. A city can elect to have its funds delivered directly to the city by providing notice in the settlement agreements. Additionally, a city within a county may opt in or out of direct payment at any time, and it may also elect direct payment of only a portion of its share, with the remainder going to the county, by providing notice to the settlement fund administrators at least 60 days prior to a payment date.
In deciding whether to allow a city’s funds to go directly to the county in which a city is located, a city should consider the following: (1) whether the amount of money is substantial enough for the city to handle on its own; (2) whether the city offers the services and has the employees to spend the money in accordance with its prescribed uses; and (3) whether the city wants to engage in the reporting requirements over the course of the next 16 years (15 years of distribution and an additional year following final distribution).
B. Use of Received Funds
Similar to the other opioid settlements, funds received from this additional settlement must be used for future opioid remediation or abatement. For instance, participating subdivisions may use funds for areas such as services to treat opioid use disorder; support people in treatment and recovery; connect people to care; address needs of criminal justice-involved persons; address the needs of pregnant or parenting women and their families, including babies with neonatal abstinence syndrome; prevent over-prescribing and ensure appropriate prescribing and dispensing of opioids; prevent misuse of opioids; prevent overdose deaths and other harms; provide leadership, planning, and coordination of programs; provide training; and conduct research.
In addition to these requirements, there is also a time limit on the spending of received funds. If funds are not expended or encumbered within five years of receipt and in accordance with the settlement agreements and the Intrastate Allocation Agreements, the funds are required to be transferred back to the State.
C. Management of Funds
Each county and city that receives payment of funds from the settlement must prepare a written report at least annually regarding the use of those funds until the funds are fully expended and for one year thereafter. Each county and city will need to track all deposits and expenditures.
This report will also include a certification that all funds received have been used in compliance with the allocation agreements. The California Department of Healthcare and Services (“DHCS”) may review the report to determine compliance with the settlement agreements and the Intrastate Allocation Agreement.
D. Opting In
The City must opt into the settlement by September 30, 2025, which requires the City to release its claims against Purdue.
If the City Council takes no action, it will effectively opt out of the settlement and San Jacinto’s designated funds will flow to the State. By opting out of the settlement, the City would still have the opportunity to bring its own action against Purdue.
CONCLUSION:
Unless the City intends to pursue its own litigation against these parties, it is recommended that the City opt into the settlement.
FISCAL IMPACT:
There is no fiscal impact, as the City will not elect direct payment.
ATTACHMENTS:
Proposed California State-Subdivision Agreement Regarding Distribution and Use of Settlement Funds
Subdivision Participation and Release Form