Where Did the Opioid Settlement Money Go?

By Crystal Lindell

How are states spending their opioid settlement money? Unsurprisingly, it’s often hard to say – even when a state has promised transparency. 

Federal, state and local governments in the United States will collect about $50 billion in opioid settlement money in coming years from basically every sector of the health care industry, including drug makers, wholesale distributors and pharmacies. 

But an investigation of 12 states by NPR and KFF Health News found that it’s unclear how much of that money is being used to prevent addiction or to help people with substance abuse issues. 

As a pain patient, I have long assumed that none of the settlement money would be used to develop effective, non-opioid pain analgesics for patients who lost their medication as a result of opioid-phobia. Based on how everything around opioids has played out over the years, I also didn’t have high hopes for what it would actually get spent on.

The NPR/KFF Health News investigation shows that I was correct to worry. 

“There are no national requirements for jurisdictions to report money spent on opioid remediation,” Aneri Pattani reported.”In states that have not enacted stricter requirements on their own, the public is left in the dark or forced to rely on ad hoc efforts by advocates and journalists to fill the gap.”

Pattani shared a story about the situation in Idaho, where local governments were required to complete a form showing how they spent settlement money and whether it was for an approved purpose. But a process meant to show transparency seemed to do just the opposite. 

“In reality, it reads like this,”said Pattani. “In fiscal year 2023, the city of Chubbuck spent about $39,000 on Section G, Subsection 9. Public Health District No. 6 spent more than $26,000 on Section B, Subsection 2. Cracking that code requires a separate document. And even that provides only broad outlines.”

Pattani said that following the money trail just led to more intentionally confusing bureaucratic language. 

For example, she found that Subsection 9 refers to “school-based or youth-focused programs or strategies that have demonstrated effectiveness in preventing drug misuse.” 

Subsection 2 refers to “the full continuum of care of treatment and recovery services for OUD and any co-occurring SUD/MH conditions.” 

“What does that mean? How exactly are you doing that?” Corey Davis, a project director at the Network for Public Health Law, wondered when he first saw the Idaho reports. Without detailed descriptions of the projects the money was spent on, it’s impossible to track. 

“It’d be similar to saying 20% of your monthly salary goes to food,” Pattani wrote. “But does that mean grocery bills, eating out at restaurants, or hiring a cook?” 

Minnesota’s ‘Dashboard’

Some states are more transparent about where the money is going. Minnesota, for example, has an online dashboard and downloadable spreadsheet listing projects. One project was in Renville County, which used $100,000 to install a body scanner in its jail to help staff find drugs in the body cavities of inmates.

So, cops are getting the money. And when you look around on the Minnesota dashboard, it becomes clear that law enforcement agencies got some of the largest shares of the state’s opioid settlement money.  

So far, Minnesota has received over $74 million in settlement money. Of that, law enforcement-related categories received about $17 million, coming in fourth behind "American Indian" with $32.6 million, “African or African American" with $22.6 million, and "Child protection” which received $22.65 million. 

I was pleasantly surprised to see that Minnesota does have a "Chronic pain patients" category — but then was disappointed to learn that it got the least amount of money of any group, receiving just $290,180 of the state’s settlement funds.

When I drilled down deeper on the chronic pain category, things only got more depressing. 

The bulk of that money ($257,220) went to Hennepin Health System to "expand access to holistic chronic pain treatment through Heals on Wheels program,” which includes traveling clinics that provide training in mindfulness, stress management, mindful movement, acupressure, acupuncture and massage therapy.

The remaining $32,960 went to a group called Health Partners, which said it would use the money to, "Certify 10 clinicians to provide Empowered Relief, a one-session class that equips patients with pain management skills, draws on principals from mindfulness and cognitive behavior therapy.” 

As a pain patient, finding out that the very small amount of Minnesota’s opioid money going to pain patients is being used to fund BS about mindfulness is beyond infuriating. We need real treatments, not happy thoughts.

Of course, in other states, it’s hard to even know how much money is going to cops and if any is going to chronic pain patients, so I guess I should be happy that there’s at least some record of things in Minnesota.  

Interestingly, over $1.9 million of Minnesota’s settlement money went to the Steve Rummler Hope Foundation, primarily for opioid education and naloxone distribution. 

Coincidentally, the Rummler Foundation happens to be the fiscal sponsor of Physicians for Responsible Opioid Prescribing (PROP), an anti-opioid activist group that played an instrumental role in raising fears about opioid use and addiction.

Several PROP members worked as paid expert witnesses for plaintiff law firms that pursued opioid litigation on behalf of the states, and were paid as much as $850 an hour for their services. The law firms themselves will pocket billions of dollars in contingency fees once all the funds are paid. That kind of detail is rarely mentioned in reporting on how settlement money is used.   

So while some details of how opioid funds were spent are technically available to the public, Pattani says it doesn’t matter if finding them requires hours of research and wading through budgetary jargon.

“Not exactly a system friendly to the average person,” she said.

Of course, if any of the opioid settlement money was ever actually meant to help people who may have been harmed by opioids, it wouldn’t be going to governments – it would be going directly to opioid users or their surviving loved ones.

But it’s been clear from the beginning that these opioid settlements were primarily a cash grab for state and local governments, plaintiff law firms, and their expert witnesses. They don’t help patients and they don’t help their loved ones. 

I don’t expect any of the states to increase transparency about where the money has been going. Most of the general public doesn’t care, so the states can funnel a lot of the money into things like body scanners, because they don’t have the pesky public watching what they’re doing. 

Maybe next time when we decide to sue every pharmaceutical company and pharmacy chain in the country, we could at least make it class action lawsuits on behalf of patients, not governments.

Companies See Cash Cow in $50 Billion From Opioid Settlements

By Aneri Pattani, KFF Health News

The marketing pitches are bold and arriving fast: Invest opioid settlement dollars in a lasso-like device to help police detain people without Tasers or pepper spray. Pour money into psychedelics, electrical stimulation devices, and other experimental treatments for addiction. Fund research into new, supposedly abuse-deterrent opioids and splurge on expensive, brand-name naloxone.

These pitches land daily in the inboxes of state and local officials in charge of distributing more than $50 billion from settlements in opioid lawsuits.

The money is coming from an array of companies that made, sold or distributed prescription painkillers, including Johnson & Johnson, AmerisourceBergen, and Walgreens. Thousands of state and local governments sued the companies for aggressively promoting and distributing opioid medications, fueling an epidemic that progressed to heroin and fentanyl and has killed more than half a million Americans. The settlement money, arriving over nearly two decades, is meant to remediate the effects of that corporate behavior.

But as the dollars land in government coffers — more than $4.3 billion as of early November — a swarm of private, public, nonprofit, and for-profit entities are eyeing the gold rush. Some people fear that corporations, in particular — with their flashy products, robust marketing budgets, and hunger for profits — will now gobble up the windfall meant to rectify it.

“They see a cash cow,” said JK Costello, director of behavioral health consulting for the Steadman Group, a firm that is being paid to help local governments administer the settlements in Colorado, Kansas, Oregon, and Virginia. “Everyone is interested.”

Costello receives multiple emails a week from businesses and nonprofits seeking guidance on how to apply for the funds. To keep up with the influx, he has developed a standard response: Thanks, but we can’t respond to individual requests, so here’s a link to your locality’s website, public meeting schedule, or application portal.

KFF Health News obtained email records in eight states that show health departments, sheriffs’ offices, and councils overseeing settlement funds are receiving a similar deluge of messages. In the emails, marketing specialists offer phone calls, informational presentations, and meetings with their companies.

Alabama Attorney General Steve Marshall recently sent a letter reminding local officials to vet organizations that reach out. “I am sure that many of you have already been approached by a variety of vendors seeking funding for opioid initiatives,” he wrote. “Please proceed with caution.”

Of course, not all marketing efforts should prompt concern. Emails and calls are one way people in power learn about innovative products and services. The country’s addiction crisis is too large for the public sector to tame alone, and many stakeholders agree that partnering with industry is crucial. After all, pharmaceutical companies manufacture medications to treat opioid addiction. Corporations run treatment facilities and telehealth services.

“It’s unrealistic and even harmful to say we don’t want any money going to any private companies,” said Kristen Pendergrass, vice president of state policy at Shatterproof, a national nonprofit focused on addiction.

The key, agree public health and policy experts, is to critically evaluate products or services to see if they are necessary, evidence-based, and sustainable — instead of flocking to companies with the best marketing.

Otherwise, “you end up with lots of shiny objects,” Costello said.

And, ultimately, failure to do due diligence could leave some jurisdictions holding an empty bag.

Take North Carolina. In 2022, state lawmakers allotted $1.85 million of settlement funds for a pilot project using the first FDA-approved app for opioid use disorder, developed by Pear Therapeutics. There were high hopes the app would help people stay in treatment longer.

But less than a year later, Pear Therapeutics filed for bankruptcy.

The state hadn’t paid the company yet, so the money isn’t lost, according to the North Carolina Department of Health and Human Services. But the department and lawmakers have not decided what to do with those dollars next.

Safe Storage and Disposal Products

Jason Sundby, CEO of Verde Environmental Technologies, said the Deterra pouches his company sells are a low-cost way to prevent expensive addictions.

Customers place their unused medications in a Deterra pouch and add water, deactivating the drugs before tossing them, ensuring they cannot be used even if fished out of the trash. A medium Deterra pouch costs $3.89 and holds 45 pills.

The goal is to “get these drugs out of people’s homes before they can be misused, diverted, and people start down the path of needing treatment or naloxone or emergency room visits,” Sundby said.

Sundby’s company ran an ad about spending settlement dollars on its product in a National Association of Counties newsletter and featured similar information online.

It may be paying off, as Deterra is set to receive $1 million in settlement funds from the health department in Delaware County, Pennsylvania, and $12,000 from the sheriff’s office in Henry County, Iowa. The company also has partnerships with St. Croix and Milwaukee counties in Wisconsin, and is working on a deal in Connecticut.

Several other companies with similar products have also used their product sites to urge jurisdictions to consider the settlements as a funding stream — and they’re seeing early success.

DisposeRx makes a drug deactivation product — its version costs about a dollar each — and received $144,000 in South Carolina for mailing 134,000 disposal packets to a program that educated high school football players, coaches, and parents about addiction.

“The plausible mechanism by which they would even be able to reduce overdose is a mystery because prescription medications are not driving overdose.”

— Tricia Christensen, Community Education Group

SafeRx makes $3 pill bottles with a locking code to store medications and was awarded $189,000 by South Carolina’s opioid settlement council to work with the Greenville County Sheriff’s Office and local prevention groups. It also won smaller awards from Weld and Custer counties in Colorado.

None of the companies said they are dependent on opioid settlements to sustain their business long-term. But the funds provide a temporary boost. In a 2022 presentation to prospective investors, SafeRx called the opioid settlements a “growth catalyst.”

Critics of such investments say the products are not worthwhile. Today’s crisis of fatal overdoses is largely driven by illicit fentanyl. Even if studies suggest the companies’ products make people more likely to safely store and dispose of medications, that’s unlikely to stem the record levels of deaths seen in recent years.

“The plausible mechanism by which they would even be able to reduce overdose is a mystery because prescription medications are not driving overdose,” said Tricia Christensen, policy director with the nonprofit Community Education Group, which is tracking settlement spending across Appalachia.

Safe storage and disposal can be accomplished with a locking cabinet and toilet, she said. The FDA lists opioids on its flush list for disposal and says there is no evidence that low levels of the medicines that end up in rivers harm human health.

But Milton Cohen, CEO of SafeRx’s parent company, Caring Closures International, said keeping prescription medicines secure addresses the root of the epidemic. Fentanyl kills, but often where people start, “where water is coming into the boat still, is the medicine cabinet,” he said. “We can bail all we want, but the right thing to do is to plug the hole first.”

Products to secure and dispose of drugs also provide an opportunity for education and destigmatization, said Melissa Lyon, director of the Delaware County Health Department in Pennsylvania. The county will be mailing Deterra pouches and postcards about preventing addiction to three-quarters of its residents.

“The Deterra pouch is to me a direct correlation” to the overprescribing that came from pharmaceutical companies’ aggressive marketing, she added. Since the settlement money is to compensate for that, “this is a good use of the funds.”

Tools for Law Enforcement

Other businesses making pitches for settlement funds have a less clear relationship to opioids.

Wrap Technologies creates tools for law enforcement to reduce lethal uses of force. Its chief product, the BolaWrap, shoots a 7½-foot Kevlar tether more than a dozen feet through the air until it wraps around a person’s limbs or torso — almost like Wonder Woman’s Lasso of Truth.

Terry Nichols, director of business development for the company, said the BolaWrap can be used as an alternative to Tasers or pepper spray when officers need to detain someone experiencing a mental health crisis or committing crimes related to their addiction, like burglary.

“If you want to be more humane in the way you treat people in substance use disorder and crisis, this is an option,” he said.

The company posts body camera footage of officers using BolaWrap on YouTube and says that out of 192 field reports of its use, about 75% of situations were resolved without additional use of force.

When officers de-escalate situations, people are less likely to end up in jail, Nichols said. And diverting people from the criminal justice system is among the suggested investments in opioid settlement agreements.

That argument convinced the city of Brownwood, Texas, where Nichols was police chief until 2019. It has spent about $15,000 of opioid settlement funds to buy nine BolaWrap devices.

“Our goal is to avoid using force when a citizen is in need,” said James Fuller, assistant police chief in Brownwood. “If we’re going to take someone to get help, the last thing we want to do is poke holes in them with a Taser.”

After Brownwood’s purchase, Wrap Technologies issued a press release in which CEO Kevin Mullins encouraged more law enforcement agencies to “take the opportunity afforded by the opioid settlement funds to empower their officers.” The company has also sent a two-page document to police departments explaining how settlement funds can be used to buy BolaWraps.

Language from that document appeared nearly word-for-word in a briefing sheet given to Brownwood City Council before the BolaWrap purchase. The council voted unanimously in favor.

But the process hasn’t been as smooth elsewhere. In Hawthorne, California, the police department planned to buy 80 BolaWrap devices using opioid settlement funds. It paid its first installment of about $25,000 in June. However, it was later informed by the state Department of Health Care Services that the BolaWrap is not an allowable use of these dollars.

“Bola Wraps will not be purchased with the Settlement Funds in the future,” Hawthorne City Clerk Dayna Williams-Hunter wrote in an email.

Carolyn Williams, a member of the advocacy group Vocal-TX, said she doesn’t see how the devices will address the overdose crisis in Texas or elsewhere.

Her son Haison Akiem Williams dealt with mental health and addiction issues for years. Without insurance, he couldn’t afford rehab. When he sought case management services, there was a three-month wait, she said. Police charged him with misdemeanors but never connected him to care, she said.

In February, he died of an overdose at age 47. His mother misses how he used to make her laugh by calling her “Ms. Carol.”

She wants settlement funds to support services she thinks could have kept him alive: mental health treatment, case management, and housing. BolaWrap doesn’t make that list.

“It’s heartbreaking to see what the government is doing with this money,” she said. “Putting it in places they really don’t need it.”

KFF Health News is a national newsroom that produces in-depth journalism about health issues.

The National Opioid Settlement Is Causing Drug Shortages

By Pat Irving, Guest Columnist

I am a retired nurse with over 40 years of healthcare experience. The principal focus of my career was on healthcare regulations, risk management and patient safety.  My most recent position was as National Leader for Risk and Patient Safety for Kaiser Permanente. 

As a pain patient myself and the victim of a mandatory opioid taper, I was motivated to understand the reasons behind the many difficulties patients have getting opioids, anti-anxiety medications and other controlled substances. 

The goal of my research over the last several months is to help patients and their families understand the drastic changes in pain management that have occurred in recent years. While much of it is due to the CDC opioid guideline and the law enforcement crackdown on prescribers, the fallout from opioid litigation now plays a major role in our inability to get prescriptions filled.

As early as 2017, acting on the incorrect premise that prescription opioids were the primary cause for the opioid crisis, the National Association of Attorneys General began a legal assault on entities they believed were responsible for the “opioid crisis.”  This included opioid manufacturers, big chain pharmacies, and the three biggest wholesale distributors -- AmerisourceBergen, Cardinal Health, and McKesson.

On July 21, 2021, the Attorneys General announced that they had reached a $26 billion settlement with the three distributors and Johnson & Johnson, who agreed to make major changes in how they do business.  The intent was to improve the safety and oversight of prescription opioids, but the unintended consequences of the settlement have caused incalculable harm to patients with chronic pain and mental health disorders.

In addition to the monetary settlement, the three distributors agreed to substantially increase measures to identity suspicious orders from pharmacies for ten years.  The distributors, collectively known as “Injunctive Relief Distributors,” also established an independent clearinghouse to keep track of every shipment of opioids and other controlled substances to pharmacies.

Red Flags and Suspicious Orders

For reference, the 571-page settlement can be found at this link.  The most important section (Exhibit “P”) begins on page 478.  Among other things, it requires the distributors to collect from each pharmacy a list of their top prescribers for opioids and other “Highly Diverted Controlled Substances,” the number of prescriptions and doses they wrote, their DEA registration number, address and medical specialty.

You may notice several other things.  Many of the restrictions came directly out of DEA regulations.  For example, there is language about “Red Flags” and “Suspicious Orders,” the latter being “orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency.”

Other potential red flags include patients paying for a prescription in cash and “out-of-area” patients with prescribing doctors from a zip code that’s 50 miles or more from the pharmacy. 

If a pharmacy customer has an excessive number of suspicious orders or “unresolved Red Flag activity,” it risks being “terminated” from receiving further controlled substances – which would effectively put the pharmacy out of business: 

“In the event that an Injunctive Relief Distributor identifies one or more unresolved Red Flags or other information indicative of potential diversion of Controlled Substances through the onboarding process or otherwise, the Injunctive Relief Distributor shall refrain from selling Controlled Substances to the potential Customer pending additional due diligence.”

It is easy to see why the settlement has made pharmacists more hesitant, even fearful, about filling orders that might be suspicious. 

Under federal law, pharmacists already had a “corresponding authority” to decide whether a prescription is suspicious and if it should be filled. Whereas before a pharmacist might call a prescriber to double check on a prescription and the reasons for it, under the settlement a pharmacist may err on the side of caution and not fill the prescription at all.

To make the situation worse, the definitions of “suspicious orders” are purposely vague, and may be interpreted in the strictest way possible.  For example, since the CDC guideline recommends that physicians “should carefully evaluate” increasing doses above 50 morphine milligram equivalents (MME), the distributor or pharmacy may see that as hard limit, not a suggestion.  

And because the CDC guideline urges caution when prescribing opioids and benzodiazepines together, that may be another hard stop on a prescription, regardless of how long or how safely a patient was managed on these medications. There may be serious consequences for the prescribing physician as well, who could be reported to state authorities and the DEA if they have too many suspicious prescriptions.

Medication Thresholds 

The injunction also brought with it medication “thresholds.”  Unlike the annual DEA production quotas which are imposed on drug makers nationwide, the settlement thresholds are very specific to each pharmacy or pharmacy chain. It limits the total volume of a controlled substance that a pharmacy may receive in any given month, quarter and year.  These threshold limits, are developed by the distributor using a statistical algorithm of their own design. 

Once a pharmacy has exceeded its particular threshold, it is unable to obtain additional medication in that drug category. Physicians and patients have no way of knowing if they are the unlucky ones to have exceeded a pharmacy’s threshold.  For many patients, this means being cutoff cold turkey, waiting another month, or having a prescription only partially filled – essentially a forced taper.

Many health plans talk about their concern for patient safety, but there is often a lack of information given to patients about the known risks of tapering, especially for “legacy” patients who have been on prescribed opioids for an extended period, and who were stable and doing well. There is often no discussion with the tapered patient on the possibility of withdrawal, suicidal thoughts, anxiety, depression, and unmanaged pain. 

The patient population most affected by the distributors’ settlement are either disabled, seniors or both.  This is the very population that has difficulty accessing alternative pain therapies such as acupuncture or injections, and in many cases are alone and homebound. It has been almost impossible to get attention for this segment of the population that needs the most support. 

There has been no strong response to the settlement and resulting drug shortages from the Health and Human Services Administration, DEA, CDC, or FDA.  There has also been a lack of a coordinated response from Medicare/CMS to patients being forcibly tapered. 

It is likewise unclear what position state medical and pharmacy boards are taking on the ruptured drug supply chain. Many patients with legitimate prescriptions now have to wait weeks for their medications to become available or are forced to travel to other pharmacies to get their prescriptions filled. Worst of all, the suffering imposed on these patients has done nothing to reduce the number of drug overdose deaths.

Our government must wake up to the fact that the injunction portion of the settlement must be modified.  There are sections of the settlement that allow for “potential adjustments” and “modifications” in the event of a national or state emergency “to meet the critical needs of the supply chain.” Such an emergency now exists.

Future efforts by stakeholders must focus attention on these sections and the need for changes. It is possible to have a safe and well monitored drug supply chain that also allows legitimate patients to have the medical treatment they deserve. As it stands now, patients are needlessly suffering due to the unreasonable restrictions imposed by the national opioid settlement.

Pat Irving, RN, lives with Complex Regional Pain Syndrome (now in remission) and piriformis syndrome, a type of sciatica. Pat wishes to thank Monty Goddard, a patient advocate, for his contributions to her research.