Local Officials Grapple With How to Spend Billions in Opioid Settlement Dollars

November 17, 2022

Photo Credit: PeopleImages

More than $50 billion in opioid settlement dollars from drugmakers, distributors and pharmacies is starting to flow to state and local governments and they need to figure out how to spend it. 

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Legal battles have waged for years to force drug companies to pay for their role in America’s opioid epidemic. Finally, in landmark settlements over the last year, thousands of states, counties and local governments have won more than $50 billion from opioid makers, prescription drug distributors and pharmacies.

But now these 3,000 state and local governments face another daunting task: How to figure out the best way to use those dollars to blunt an epidemic of drug addiction that has killed more than half a million people.

States are just starting to receive the funds and begin the process of answering that question.

Some of those states have turned to Sara Whaley for help. Whaley is an opioid policy researcher at the Johns Hopkins Bloomberg School of Public Health. Her big concern is that local officials won’t invest the money in methods, like harm reduction or treatment, that have proved to save lives.

“It’s not as easy as just putting the money towards evidence based programs,” she said. “There’s this unfortunate layer to it that some of this stuff is political and personal.” In other words, all that money is forcing officials to reckon with long-held beliefs and judgements about addiction.

Is addiction a crime or is addiction an illness? Will officials look to build jails and hire more police or will they look to treatment models and care?

Some states, including Rhode Island and Minnesota, have set up statewide councils of elected officials and experts who are holding public meetings to decide where some dollars should go. A chunk of the settlement money in each of those states is also going to local governments and Native American tribes.

Minnesota established its Opioid Epidemic Response Advisory Council in 2019 to distribute about $15 million in state fees imposed on opioid manufacturers and distributors. Council members will also distribute a portion of the forthcoming settlement monies.

Dave Baker is chair of the council and a state representative. Baker’s view on addiction shifted after his 25-year-old son Dan died of an overdose.

“He was a great kid. He was a good student. He was a good athlete,” Baker said. “When this pill hit him, it changed everything in his brain.” Dan had struggled with addiction after getting prescribed opioids for a back injury. He overdosed in 2011.

Shortly after Dan’s death, Baker came to better understand addiction, and the scientific information he learned as part of the opioid response council helped him recognize how to best help people like his son.

He learned from harm reduction experts that distribution of naloxone, a drug that can reverse opioid overdoses, is an important investment.

Over the three years the council has been running, it’s awarded more than half of its $5.7 million in grants to groups that distribute or train people how to use naloxone, how to distribute clean needles or offer medication-assisted treatment.

Three quarters of the $300 million in Minnesota’s opioid settlement funds will go to counties and local governments. Baker worries some might blow the dollars on jails, or other law enforcement moves because they think about addiction the way he used to think about addiction.

He hopes to speed up the learning curve. “It took me and thousands of other families to have a loss like this to get it. And that was wrong,” he said.

The opioid settlement money does come with some spending guardrails. For example, the biggest opioid settlement between 46 states & Johnson and Johnson, and three prescription drug distributors, AmerisourceBergen, Cardinal Health and McKesson for $26 billion has limits, requiring that at least 85% of funds go to programs that help prevent opioid abuse or help those struggling with addiction.

States and local governments are supposed to report to attorneys if they aren’t meeting that threshold.

But that limited accountability, brings back fears of what happened with the $246 billion tobacco settlement that went to states because of harm the tobacco industry had done to public health.

Those dollars flowed into the state’s general funds and much of it ended up not targeting tobacco smoking. Instead many of the settlement dollars plugged general state budget holes, built roads and, in North Carolina, some cash even went to subsidize tobacco farmers.

The Campaign for Tobacco Free Kids estimates less than 3% of the money earmarked to solve this problem has been spent on prevention and programs to help people quit.

Dave Baker worries about a repetition of that grim outcome. “My biggest fear is we’re going to end up like the tobacco settlement,” said Baker. “We’re just going to blow our money on things that don’t do anything about helping people in recovery.”

Local governments have to report to the council how they spend the funds, but ultimately can allocate dollars how they want. Part of Baker’s role on the statewide council is to share what he’s learned about addiction and treatment with officials across the state charged with allocating the money. It’s a big reason he’s so vocal about what happened to his son. He hopes to speed up the learning curve.

“It took me and thousands of other families to have a loss like this to get it. And that was wrong,” Baker said.

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Episode Resources

Selected Reporting and Research on Opioid Settlement Funds

Strategies for Effectively Allocating Opioid Settlement Funds (RAND-USC Schaeffer Opioid Policy Tools and Information Center, 2022)

Companies Finalize $26 Billion Deal With States and Cities to End Opioid Lawsuits (Jan Hoffman, New York Times, 2/25/2022)

A State-by-State Look at the 1998 Tobacco Settlement 23 Years Later (Campaign for Tobacco-Free Kids, 1/12/2022)

States could get billions from opioid lawsuits. They have to decide how to spend it (Andrew Joseph, STAT News, 7/30/21)

15 Years Later, Where Did All The Cigarette Money Go? (NPR Staff, 10/13/13)

Episode Credits


Dave Baker, Minnesota State Representative and chair of the state’s Opioid Epidemic Response Advisory Council

Sara Whaley, Opioid Policy Researcher at Johns Hopkins Bloomberg School of Public Health

The Tradeoffs theme song was composed by Ty Citerman, with additional music this episode by Blue Dot Sessions and Epidemic Sound.

This episode was reported by Alex Olgin and mixed by Andrew Parrella. Editing assistance from Cate Cahan.

Additional thanks to: Christine Minhee, Justin Berk and the Tradeoffs Advisory Board and our stellar staff!