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What are the opioid settlements?
The opioid settlements refer to offers from opioid manufacturers, distributors, and pharmacies to settle various lawsuits against their companies across the US. Some states, including Michigan, will also receive settlement funds from local pharmacies. The money received from these settlements will be distributed to Michigan's state and local governments.
How will the settlement funds be spent?
The majority of funds received from the opioid settlements must be spent on opioid remediation. For the two largest settlements being received by Michigan it is specified that 85% of dollars must be spent on opioid remediation with 70% of payments for future opioid remediation. As defined by the national opioid settlement:
Opioid remediation: Care, treatment, and other programs and expenditures (including reimbursement for past such programs or expenditures except where this Agreement restricts the use of funds solely to future opioid remediation) designed to:
- Address the misuse and abuse of opioid products.
- Treat or mitigate opioid use or related disorders.
- Mitigate other alleged effects of, including on those injured as a result of, the opioid epidemic.
Are there restrictions on how funds can be used? What is Exhibit E?
Exhibit E is a document attached to most of the national opioid settlement agreements providing a list of allowable uses for spending of the settlement funds. Exhibit E is organized in two main sections: Core Strategies and Approved Uses.
It is a non-exhaustive list, which means that it includes some, but not all, of the possible ways that opioid settlement funds can be spent.
Core Strategies are intended to be prioritized over Approved Uses, however all items under Exhibit E represent allowable uses of opioid settlement funds.
Distributors and Johnson & Johnson (Janssen) Settlements
Since 2021, Michigan Attorney General, Dana Nessel, has joined a bipartisan coalition of Attorneys General that has already secured $776 million for Michigan governments. Opioid manufacturer Johnson and Johnson and pharmaceutical distributors Cardinal Health, McKesson, and AmerisourceBergen settled with the State last year, earmarking $26 billion for use across the nation in opioid treatment and addiction prevention efforts.
Pharmacy and Manufacturer Settlements
National Settlements with Teva Pharmaceuticals, Allergan Pharmaceutical, CVS Pharmacy, and Walmart, inked at the end of 2022, are expected to add over $445 million for Michigan governments. In total, Nessel’s efforts have brought nearly $1.6 billion dollars for Michigan governments to combat Michigan’s ongoing opioid epidemic.
- Walgreens: In June 2023, Michigan AG announced settlement with Walgreens Pharmacy worth $338 million for their role in Michigan’s opioid epidemic. The settlement requires Michigan to join the Walgreens National Opioid Settlement, which provides approximately $200 million over 15 years. By participating, eligible local governments will have opportunity to participate in this portion of the settlement and receive direct payments. Specific information about payments, settlement conditions, and payment schedule is TBD.
- McKinsey & Co: $573 million settlement reached in 2021 with one of the world’s largest consulting firms for role in helping opioid companies promote their drugs and profiting from the opioid epidemic. Michigan will receive more than $19.5 million from the settlement.
- Mallinckrodt: $233 million settlement reached in 2022 with company that sells and markets pharmaceutical products. Michigan will receive close to $11.3 million from the settlement. Mallinckrodt Notice of Abatement Distribution – Payment 1.
- Purdue Pharma and Endo International: Additional funds may also be issued to Michigan through Purdue Pharma and Endo International, who both are pursuing bankruptcy plans that include opioid abatement trusts funds.
Lawyers for American Indian Tribal Nations have brought suits against numerous companies involved in manufacturing and selling opioids in the United States. After lengthy litigation, they successfully negotiated settlements with many defendants. (www.tribalopioidsettlements.com/)
A state-subdivision agreement between the State of Michigan and local government directs how opioid settlement funds are distributed. Allocation percentages can be found on exhibit A of the Michigan State-Subdivision Agreement for Allocation of Distributor Settlement Agreement and Janssen Settlement Agreement. BrownGreer is the national settlement distributor and is responsible for notifying local governments of their payments.
Payments from the Distributor Settlement and Janssen Settlement will be received separately. There will also be separate notices for the two settlements and their applicable payments. Payments are based on a national allocation formula which takes into account opioid overdose fatalities, prevalence of opioid use disorder and distribution of opioids. Consideration should also be given to the fact that the amount of funds received by each county will differ on an annual basis. Specific to the Janssen and Distributor settlements, 85% of dollars must be spent on opioid remediation with 70% of payments for future opioid remediation. Local governments also have the ability to combine funds with counties, cities, townships and municipalities.
To view county-specific settlement amounts, visit the Michigan Association of Counties Opioid Settlement Resource Center.
MDHHS recognizes the distinct needs of local governments and communities. To assist with understanding settlements and best practices for spending we have compiled a list of resources.