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A Dose of Relief: How States Are Spending Opioid Settlement Money

Lawmakers hope to ensure the funds go toward the prevention of opioid misuse and treatment for opioid users.

By Erika Parkinson  |  July 31, 2023

The United States set a grim record in 2022, with more than 105,000 Americans dying from a drug overdose, according to the Centers for Disease Control and Prevention.

That figure pushed the total number of overdose deaths since 1999 to over 900,000. Opioids were responsible for most of the deaths in 2021, causing more than 75,000 overdose deaths that year, up from 56,000 the year before. Illicit fentanyl and other synthetic opioids drove the increase, figuring in 73% of the overdoses. According to the National Institute on Drug Abuse, most illicit opioid users first misused prescribed opioids.

Disruptions from the COVID-19 pandemic compounded the situation, causing people who use drugs to purchase them from new and unfamiliar sources, reducing the availability of the opioid overdose reversal drug naloxone and creating further barriers to treatment for substance use disorders.

The total economic burden of combating the opioid crisis in 2013 was estimated to be $78.5 billion, according to a study from the journal Medical Care. Over one-third of that amount, $28.9 billion, was due to increased health care and substance abuse treatment costs. About one-quarter of the cost was borne by the public sector in health care, substance abuse treatment and criminal justice costs.

States and local governments go to court

With multiple pending opioid-related lawsuits across the United States, a judicial panel decided to streamline the process and combine many of them into a single, consolidated civil lawsuit, the National Prescription Opiate Litigation. The plaintiffs, including state and local governments, accuse the defendants of fueling the nation’s opioid crisis to their own financial benefit by failing to address the risks of addiction and overdose. The defendants, however, maintain that their medications were highly regulated and monitored. The plaintiffs seek compensation for the large sums they have spent dealing with the opioid crisis through high costs to the health care and criminal justice systems. It is likely that many of the lawsuits will end in settlements; those not settled will be sent back to local courts.

State actions

State attorneys general are litigating and negotiating settlement agreements, but state legislatures have taken a role in appropriating some of this money, with lawmakers taking varying approaches. The challenge for states and tribal nations is to ensure the money is used to prevent opioid misuse and provide treatment for opioid users. In fiscal year 2020, states collected more than $27 billion from the tobacco settlement and taxes, and about 2.7% of the funds were used for tobacco use prevention programs. The American Medical Association and Johns Hopkins University have reported on steps that can assist lawmakers in determining how to allocate their settlement funds.

Recent state actions include:

  • Colorado (HB19-1009) used settlement funds to expand a program that provides housing vouchers for people with a substance use disorder; establish standards for recovery residences and facilities; and create a recovery residence certification grant program and an opioid crisis recovery fund advisory committee. In a memorandum, Attorney General Phil Weiser allocated 60% of funds to regional opioid abatement, 20% to participating local governments, 10% to the state government and 10% to specific abatement infrastructure projects.
  • Minnesota (HB19-400) established the Opioid Addiction Advisory Council, the Opioid Stewardship Fund and an opiate product registration fee, and it modified provisions related to opioid addiction prevention, treatment and recovery. Another law (SB21-4025) allocated settlement funds into two accounts and created requirements for municipalities that receive direct payments from the settlement agreement.
  • North Carolina (SB21-105) created the Opioid Abatement Reserve within the Department of Health and Human Services. The state’s Opioid and Substance Use Action Plan specifies that 85% of settlement funds will go to counties and municipalities and the remaining 15% will go to state government. Local governments have two options for spending settlement funds: evidence-based, high-impact strategies, or collaborative strategic planning.
  • Nevada (SB21-390) established the Fund for a Resilient Nevada and detailed principles for spending settlement funds that include using evidence-guided spending, investing in youth prevention, focusing on racial equity, and developing a fair and transparent process for spending settlement funding. It also created an advisory committee for Resilient Nevada.
  • Texas (SB21-1827) created an opioid abatement account and trust fund, along with a statewide opioid settlement agreement and a council responsible for ensuring that funds are allocated fairly and are spent cost-effectively.

Erika Parkinson is an intern in NCSL’s Health Program.

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