Bill Seeks to Ring-Fence States’ Spending of Opioid Settlement Cash

    State governments shouldn’t be stashing opioid settlement money in their general funds, say the lawmakers behind a bill in Congress. They want to mandate that the billions of dollars be used for specific purposes, including for programs and services helping people impacted by substance use disorder or overdose risk.

    Representatives Marcy Kaptur (D-OH) and Ashley Hinson (R-IA) introduced the Opioid Settlement Accountability Act on January 11, in a rare recent example of bipartisan cooperation. The bill would “[ensure] the funds that states receive from opioid settlements are used to fight the epidemic and are focused towards treatment, prevention, education, and enforcement … [and] ensure funds from opioid related settlements are used to address the opioid crisis and are not being used as a piggy bank for other projects.”

    The money at stake comes from the national settlements of lawsuits against opioid manufacturers and distributors—including huge pharmaceutical and health care companies like McKesson, AmerisourceBergen and Johnson & Johnson—for allegedly fueling the overdose crisis (the companies admit no wrongdoing under the deal). The corporations will pay up to $26 billion to states over 18 years.

    The two congressmembers want the money ring-fenced for: treatment and “wrap around services” for people with opioid use disorder; education, prevention and training on “opioid abuse”; long term recovery support to help people get jobs and homes, “navigate the criminal justice system, and avoid relapsing”; programs to help people reduce or quit opioid use, and “educate our doctors and nurses about non-opioid pain management”; and support for police and first responders.

    Even if Congress approves the bill, there are questions around how much weight it would carry when the companies are paying state governments. There’s also already language in the court settlements that makes clear at least 85 percent of cash “must be used for abatement of the opioid epidemic, with the overwhelming bulk of the proceeds restricted to funding future abatement efforts by state and local governments.” But Congress may have some leverage in seeking compliance.

    “As the opioids litigation settlements are determined, the federal government must assure Medicaid-related dollars are directed and allocated to explicitly fund efforts to curb this tragic crisis,” said Rep. Kaptur in a statement with Hinson. “This legislation would ensure accountability of the opioids settlement money recouped from big pharmaceutical companies and drug distributors and protect the funding from being used for other matters.”

    “It’s exciting to see Congress paying attention to this massive expenditure. I do think there could be federalism problems.”

    Dennis Cauchon, president of Harm Reduction Ohio, said he’s encouraged by the bill, but worries that any attempt to federally regulate how states spend the money could run into legal challenges because the funds don’t belong to the federal government.

    “It’s a great first step,” he told Filter. “It’s exciting to see Congress paying attention to this massive expenditure. I do think there could be federalism problems, because it’s state and local government money, there’s no direct federal involvement. They have to figure out a way to make it valid.”

    The bill’s text prohibits the federal government from classifying any Medicaid-related funds coming from opioid settlement cash as an “overpayment.” This rule, Cauchon noted, is at least one tool that Congress could use to exercise leverage over states. It’s “the hook to get federal involvement,” he said—“that they will not pay states money they might be entitled to under Medicaid unless they follow the rules of this law.”

    Rep. Kaptur is trying to pass this bill for the third time since 2019. But issues include that it doesn’t set specific requirement for states to allocate the money among listed priorities, and sets no other consequences if they fail to spend it as broadly directed.

    A statement from Rep. Kaptur’s office noted that some opioid settlement funds are being spent in ways that have nothing to do with the crisis. As one example, Greene County in Tennessee has used $2.4 million of the $2.7 million it received to pay off the county debt, and paid $50,000 to purchase a garbage vehicle. Other jurisdictions have used opioid settlement money to buy equipment for police officers, and a body scanner to detect contraband in jails.

    Those latter examples bring us to another issue with the bill. Because far from ruling out expenditures of this kind, the bill specifies that settlement money should help police and first responders purchase “capital equipment relating to the illegal distribution of opioids and opioid analogues.”

    Cops buying Narcan kits is one thing. But the bill’s text could allow funding to purchase vehicles, weapons or surveillance technology for opioid interdiction—further expanding the drug war, rather than providing care and services for people in need.

    With money now flowing to state and local governments, many are recalling a similar legal and political earthquake—the lawsuits against tobacco companies throughout the 1990s that culminated in the enormous Master Settlement Agreement. Over decades, much of the $246 billion paid to state governments under this agreement has been diverted to uses that have nothing to do with reducing smoking or mitigating its harms.

    “If you look at the tobacco settlement years ago, states didn’t spend it on what they were supposed to,” Cauchon said. “They spent it on whatever they wanted. It looks like much of the opioid settlement is shaping up the same way; it becomes a sort of slush fund for state and local governments to not apply to what the reason for the settlement was, but [to] other things they think are more important.”

    “There’s much less room in the opioid settlements for spending on things that are totally unrelated to opioid remediation.”

    The opioid settlement does have more of a guardrail in place than the tobacco one, however.

    “There’s much less room in the opioid settlements for spending on things that are totally unrelated to opioid remediation,” Kate Boulton, senior legal technical advisor for the Overdose Prevention Program at Vital Strategies, told Filter.

    “Only 15 percent of the [opioid] distributor settlement ($26 billion) under the terms are ‘unrestricted’—spend it on potholes or whatever you want,” she explained. “Everything else needs to be consistent with Exhibit E of the settlement, which lays out authorized expenditures, what is opioid remediation. [Tobacco] is an important cautionary tale to have in mind; advocates need to be watching this process, [but] I don’t think there’s the same danger of money going to any old thing.”

    In Ohio, Cauchon criticized opaque and secretive processes set up by elected officials to collect and dole out settlement money. He fears this pattern being repeated throughout the country, and that without transparency or oversight, settlement money will be misused.

    “I hope someone encourages more transparency and adherence to the reason for the opioid settlement,” he said. “Hundreds of thousands of people died, nobody represents them. County commissioners didn’t die, but they control the money. And they have different interests than a grandmother who’s supporting an orphaned 6-year-old, and that grandmother in Ohio or anywhere else is getting almost no money.”



    Photograph (cropped) by 401(K) 2012 via Flickr/Creative Commons 2.0

    • Alexander is Filter’s staff writer. He writes about the movement to end the War on Drugs. He grew up in New Jersey and swears it’s actually alright. He’s also a musician hoping to change the world through the power of ledger lines and legislation. Alexander was previously Filter‘s editorial fellow.

    • Show Comments

    You May Also Like

    In 2018, the Temperance Movement Still Grips America

    Our society—even some of its most progressive elements—vilifies alcohol. This stands in opposition to ...