On December 13, 2024, the U.S. Department of Justice announced that global consulting firm McKinsey and Company had agreed to pay $650 million to resolve criminal and civil investigations stemming from McKinsey’s work for Purdue Pharma to “turbocharge” sales of OxyContin, a dangerous and addictive drug that helped fuel the opioid crisis. These payments are in addition to nearly $900 million that McKinsey has already paid since 2021 to settle lawsuits from state and local governments as well as public school districts. This total of $1.5 billion paid by McKinsey is just a fraction of the estimated $50 billion that drugmakers, pharmacies, and others have agreed to pay over roughly two decades to state and local governments for their respective roles in the opioid epidemic. States have already begun receiving and spending settlement funds but the bulk of the money will be paid out over the coming years. With billions of dollars yet to be spent, it is imperative that the individuals and groups tasked with spending the funds receive appropriate oversight, input, and if necessary, criticism, while carefully considering the best ways to spend the funds to ensure a maximum impact.
Comedian John Oliver did a segment on his show about how state and local governments are, at times, failing to uphold their obligation to spend 85% of the opioid related settlement funds on addressing the opioid epidemic or are choosing to spend the money in controversial ways.
The criticism of how governments are spending their settlement funds can be broken into a few groups:
1. The money is not being spent fast enough
There is a difficult balance to strike here. On one hand, much of the following criticism can be attributed to quick and uninformed decisions at least in part caused by an urgency to spend large amounts of money. In that respect, patience and diligence are important for decision-makers to exercise when deciding how to spend settlement funds. On the other hand, some argue that urgency is key. For example, Montana began receiving settlement funds in January 2023 but it appears that the first approved spending of the funds did not take place until July 2024. There are people in these states who could benefit from services funded through these settlements that are still overdosing and dying
2. The money is being spent in a way that does not address the opioid epidemic
Some counties have already started spending settlement related funds to pay down debt or plug budgeting gaps. While this spending may be technically allowed, it has drawn criticism from those who believe the settlement money needs to be used to curb the existing opioid epidemic that continues to claim tens of thousands of American lives each year. However, some argue that state and local governments were forced into more debt because of the costs and decreased tax revenue caused by the opioid epidemic and they see these funds as a way to pay governments back for past damages.
3. Controversial goods and services are being purchased
Most of the settlements stipulate that 85% of the awarded money must be spent on things that would address the opioid epidemic [1]. However, what exactly “addresses” the opioid epidemic is not explicitly defined. This has led to some controversial purchases such as when the city of Brownwood Texas spent $15,000 on nine BoloWraps which are gun like devices used by law enforcement to shoot a kevlar tether out in an attempt to wrap around and disable a fleeing individual. The Texas city approved the use of settlement funds for these purchases while the purchase of the same devices was shot down in California by the state Department of Health Care Services.
4. Governments are not being transparent with their spending
Such is the case in Idaho, a state that promised 100% accountability of settlement fund spending along with public reporting that “an average person could understand”. However, an investigation found that while Idaho did report 100% of its settlement spending, deciphering the spending required a separate document from what was reported and even then, the description of the goods and services purchased remained extremely vague.
Fortunately, groups like the Kaiser Family Foundation (KFF) Health News group and OpioidSettlementTracker.com are doing a remarkable job of tracking the various opioid related settlements and how governments are spending the settlement money. Unfortunately, some states will continue to be opaque in their spending while others will spend money on things that do nothing to address the continuing crisis. You can research how your state spends opioid settlement money here.
In an effort to inform ourselves, we took a look at how our home state of Pennsylvania spends opioid settlement funds.
As of December 15, 2024, Pennsylvania had been awarded a little over $2 billion in opioid related settlement funds. By law, 70% of the funds will be distributed to individual counties, 15% will be allocated to the state, and 15% will be paid to “litigating subdivisions”, such as DA offices, involved in the state’s litigation against the various responsible companies. The 70% of funds allocated to individual counties and 15% allocated to litigating subdivisions can be spent by local officials but expenditures must be certified by the PA Opioid Misuse and Addiction Abatement Trust and be consistent with one of the “approved uses” laid out in Exhibit E. On the other hand, the 15% of funds allocated to the state of Pennsylvania can be appropriated by the State’s General Assembly and spent with seemingly little oversight or public input.
Allegheny County, the location of Resilient’s headquarters in Pittsburgh PA, is one of the counties that receives a portion of the 70% of settlement funds allotted to individual counties. The county ensures transparency for settlement fund spending by maintaining an up-to-date and easy to use dashboard showing how the county is spending, and plans to spend, opioid settlement funds.
It is important that the companies that helped fuel the opioid epidemic pay for the pain they have caused and these settlements are a small step in that direction. However, it is important to remember that just because the money has been awarded does not mean that it will be spent in an impactful way. We at Resilient Lifescience believe that all states should commit to 100% public and transparent sharing of opioid settlement spending and should spend intentionally to ensure the money will have an impact on the continuing opioid epidemic. If you are concerned about how settlement funds are being spent in your state, engage your state and local officials because billions of dollars of settlement funds will be paid out over the coming years and while initial spending efforts have received warranted criticism, it is not too late for state and local officials to correct course. You can use this link to research settlement fund spending in your state and identify the best way to have your input heard.
*Disclaimer: As of the published date of this article, Resilient Lifescience has not applied for, or received, funds from any government related to opioid settlements.
[1] https://kffhealthnews.org/news/article/opioid-settlement-legislation-federal-oversight/
