FAQs: Opioid Settlement Funds

The opioid epidemic has had devastating impacts on the lives of millions of Americans.

Since 1999, nearly 645,000 people have died from an overdose involving any opioid, including prescription and illicit opioids.

Nationwide, states and local governments have taken action against companies along the opioid supply chain to help address the crises afflicting their communities.

• In 2021, nationwide settlements were reached to resolve the opioid litigation brought by states and local governments against the three largest pharmaceutical distributors, Mckesson, Cardinal Health, and AmerisourceBergen, and against manufacturer Janssen Pharmaceuticals and its parent company Johnson & Johnson (J&J).
• The Distributors are set to pay up to $21 billion over 18 years and J&J is set to pay up to $5 billion over nine years. Collectively, this settlement is known as the “MDL” or opioid multi-district litigation.
• Additionally, in 2022 agreements were reached with three pharmacy chains including; CVS, Walgreens, and Walmart, and two additional manufacturers; Allergan and Teva.
• To date, more than $56 billion dollars will be paid to state, local, and tribal governments.

States and subdivisions are the only entities eligible to receive settlement money through the MDL. Washington D.C. and the five U.S. Territories are treated as states in the settlement.

Some jurisdictions have joined their peers in reaching settlement agreements collectively. Other jurisdictions have maintained separate lawsuits and therefore have individual agreements with the companies.

There are several online trackers designed to keep track of how settlement funds are being allocated to state, local, and tribal governments.

The MDL agreement creates a default allocation to states and subdivisions, with 15% allocated to the State Fund, 70% to the Abatement Accounts Fund, and 15% to the Subdivision Fund.

Many states have made changes to that allocation, ranging from Delaware, where the state controls 100% of the funds, to North Carolina, where 85% of the funds go to local governments.

The National Academy of State Health Policy (NASHP) created a comprehensive list of state government approaches.

It is up to the individual states and local governments to decide how the money received from opioid settlements will be spent.

As part of the MDL, a list of core strategies and approved uses was created and is known as “Exhibit E”.

Some jurisdictions have their own lists of allowable uses.

• Johns Hopkins Bloomberg School of Public Health created a set of principles to help guide states on how to spend the money in ways that will benefit those with the greatest impact from the opioid epidemic.
• Other organizations have also created guidance in deciding how to allocate funding.

Each state has developed its own processes for reporting expenditures across state and local entities.

KFF Health News has reported on each state’s rules for public reporting, and many local journalists are reporting on settlement expenditures.

There is a legal formula designed as part of the settlement agreement that determines how much each state gets.

Some of the items considered in this formula are:

• The amount of opioids shipped to the state.
• The number of opioid-related deaths that occurred in the state.
• The number of people who suffer opioid use disorder in the state.

Annual payments from the national settlement are disbursed in the form of base and incentive payments. The amount distributed to each state is determined by a calculation of the maximum potential payment each state may receive.

How much of that maximum amount each state will receive in any given year is then based on:

• Which incentive payment categories that state qualifies for in that year; and
• Whether the amounts that would otherwise be payable are suspended due to litigation by non-settling subdivisions within a settling State and whether any offsets are taken against amounts otherwise payable, based on judgments in favor of non-settling subdivisions.