Historic opioid settlement announced; if approved, states and localities could see payouts as soon as next year

The $26 billion settlement with drug companies over their role in the opioid epidemic will allow "communities across the country to secure a jolt of funding to address an epidemic in painkiller addiction that hasn’t abated," Sara Randazzo reports for The Wall Street Journal. "Wednesday’s announcement signifies an important milestone that could clear the way for money to be received by states as soon as early next year."

The nation’s top three drug distributors — McKesson Corp., AmerisourceBergen Corp., and Cardinal Health Inc. — will pay up to $21 billion over 18 years and drug manufacturer Johnson & Johnson "will pay up to $5 billion over nine years with up to $3.7 billion to be paid during the first three years," Beth Wang reports for Inside Health Policy.

"The amounts could decrease if not enough states sign on, and the companies can still walk away if they decide the level of participation doesn’t buy them the global peace they are seeking to put the lawsuits behind them," Randazzo reports. States have 30 days to join the deal, and local governments in participating states have up to 150 days.

"Each state’s share of the funding has been determined using a formula that considers the state’s population and impact of the opioid crisis on the state, including the number of overdose deaths, the number of residents with substance use disorder and the number of opioids prescribed," Wang reports.

There are restrictions on how the money can be used. People directly affected by opioid abuse won't receive any money directly, and "states can’t use the money to fill general budget holes, as they did after a $206 billion deal with tobacco companies in the 1990s," Randazzo reports. "Instead, the majority must be spent on social services to address the harms of opioid addiction, like treatment programs, education on how to dispose of pills and needles, and bolstered funds for first responders. One community may use it to help a large problem of addiction in the homeless population, while another may be more focused on opioid-addicted babies."

States will split the money with local governments. A new law in Kentucky gives half of its estimated $460 million share to state programs and half to local governments. Use of the money would be overseen by a new commission created by the law. An agreement in North Carolina gives 80% of the money to local governments, 15% to the state and 5% to an fund creating incentives for local governments to be part of the agreement.

The settlement has other requirements: Johnson & Johnson will be required to stop selling opioids, and will "also will be prohibited from funding or providing grants to third parties for promoting opioids or lobbying on opioid-related activities," Wang reports. "The company also will need to share clinical trial data under the Yale University Open Data Access Project."