States Urged Not To Use Opioid Mega-Deals For Budgets

By Jeff Overley
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Law360 (January 27, 2021, 7:51 PM EST) -- Major medical organizations urged public officials Wednesday not to use the tens of billions of dollars they receive from opioid litigation settlements to ease budget woes instead of the narcotic abuse crisis, which has flared with new intensity amid the coronavirus pandemic.   

The alert — dubbed "Principles for the Use of Funds From the Opioid Litigation" — advised state and local officials to make five commitments for the expected influx of money, including that they not siphon settlement funds to plug spending holes created by the pandemic's economic downturn.

Dr. Joshua M. Sharfstein, a vice dean at the Johns Hopkins Bloomberg School of Public Health who worked with colleagues to coordinate the principles, told Law360 that devoting legal payouts to anti-addiction efforts could deliver huge returns in the form of stable and productive communities.

"Following the evidence, investing in prevention, investing in effective treatment — that is going to pay off both in lives saved and in economic recovery," Sharfstein, a former principal deputy commissioner of the U.S. Food and Drug Administration, said in an interview.

The principles were signed by more than 30 professional, academic and advocacy groups, including the American Medical Association, the Yale Program in Addiction Medicine and the Legal Action Center. In an announcement that accompanied the principles, the groups argued that governors, attorneys general and lawmakers should "focus on addiction treatment and prevention" and "avoid diversion of funds to close budget gaps."

A report this month from the National Conference of State Legislatures described wide-ranging economic fallout from COVID-19 among the states, most of which have some sort of requirement to pursue balanced budgets. While some states have weathered the pandemic's financial storm, the ones hit hardest have seen "catastrophic revenue declines" that federal assistance "was not nearly enough" to offset, according to the NCSL.

The economic hardships caused by the pandemic are likely a factor in soaring drug overdoses, roughly two-thirds of which involve opioids. After fatal overdoses declined 4% from 2017 to 2018, they began ticking up again in 2019 and accelerated further as the pandemic took hold. The period from June 2019 to May 2020 saw 81,000 overdose deaths, the most ever in a 12-month period and 18% more than the preceding 12-month period, according to the Centers for Disease Control and Prevention

States, cities and counties have filed thousands of lawsuits accusing drug manufacturers, distributors and pharmacies of reckless painkiller sales that sparked an epidemic of opioid addiction, killing more than 500,000 Americans over the past two decades. Deaths have often involved street drugs, such as heroin and illicit fentanyl, that people use after getting hooked on prescription opioids.

Johnson & Johnson and three drug distributors have proposed opioid settlements collectively worth $26 billion. Billions more are expected from bankrupt drugmakers, including Purdue Pharma LP, and further payouts could come from a number of large drugmakers and pharmacies that are still fighting opioid cases.

In Wednesday's announcement, signatories to the principles specifically called on officials to "avoid the mistakes of the 1998 tobacco settlement," a roughly $250 billion accord that cities and states have notoriously tapped for myriad spending priorities unrelated to smoking prevention.

While that advice may have more urgency because of the pandemic, it has been voiced frequently during the opioid litigation and acknowledged by plaintiffs attorneys. Motley Rice LLC co-founder Joe Rice, lead plaintiffs' counsel in both the tobacco settlement and the opioid cases, told Law360 in a 2019 interview that the tobacco settlement "made a huge difference" in preventing youth smoking but wasn't universally effective.

"In some states, not all the money made a big difference in health care. Unfortunately, we on the litigation side, we can only recover funds. We don't appropriate funds," Rice said in the interview. He could not immediately be reached for comment on Wednesday.

Governments are suing opioid sellers partly for costs associated with opioid abuse, such as strain on the criminal justice system. Their cases rely heavily on a professed need for money to ease the opioid crisis via spending on addiction treatment, physician education and overdose-reversal drugs.

However, even if opioid settlement dollars are primarily spent on prevention and treatment, results are far from guaranteed. The federal government has poured tens of billions of dollars into prevention and treatment, and yet the death toll has kept rising.

Sharfstein told Law360 that he is nonetheless optimistic that litigation settlements will "play a very important role" in easing the crisis. He expressed hope that officials will listen to experts who often advocate controversial but effective actions, such as wider use of opioid-dependence drugs like methadone and buprenorphine.

"The idea that with new funding could come a new commitment to following evidence I think is promising," Sharfstein said.

Sharfstein declined to comment on reports that he has been under consideration to lead the FDA in the Biden administration.

--Additional reporting by Emily Field. Editing by Alanna Weissman.

For a reprint of this article, please contact reprints@law360.com.

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