Part of a tobacco settlement worth more than $200 billion has gone to helping people stop smoking and quit in several states. Instead, most of the money has helped balance the state budget, lay fiber-optic cabling and repair roads.
And while the agreement was successful in many ways—smoking rates have dropped significantly—cigarettes are still blamed for more than 480,000 American deaths a year.
“We saw a lot of those dollars being spent in a way that doesn’t help the population that was harmed by tobacco,” said Bradley D. Stein, director of the RAND Corporation’s Opioid Policy Center. “And I think it’s important that opioid disposal dollars are spent wisely.”
Lawyers for states and local governments and companies laid out key details of the agreement on Wednesday and said it provides for ensuring that the funds are used as intended.
The deal calls on major national drug distribution companies to pay up to $5 billion to drugmaker Johnson & Johnson, in addition to billions more. AmerisourceBergen and Cardinal Health are expected to contribute $6.4 billion each. McKesson owes $7.9 billion.
About $2 billion in funding will be reserved for private attorneys who were hired by the government to work on their lawsuits against the industry. The state attorney general’s office may also keep some money.
The states — except West Virginia, which has already struck agreements with the companies but could get more through the deal — will have 30 days to approve the agreements. After that, local governments will have four months to sign. Each company will decide whether sufficient jurisdictions agree to proceed with the deal. The more governments sign up, the more companies will pay.
“While the companies vigorously dispute the allegations made in these lawsuits, they believe that the proposed settlement agreement and the settlement process that it establishes… It is an important step towards providing meaningful relief to the communities in India.” distribution companies said in a statement.
Connecticut Attorney General William Tong said it would be the second largest cash settlement of its kind in US history, behind a tobacco deal in the 1990s.
North Carolina Attorney General Josh Stein said the opioid agreement requires state and local governments to use the vast majority of funds on shortages — and that would be subject to a court order. The deal demands at least 70% of the funds to go on the list of activities such as providing naloxone, a drug that reverses overdoses; helping homeless people with addictions; Or educating the public on the dangers of drugs, among many other possibilities.
“We are all experiencing the consequences in communities in North Carolina across the country,” Stein said in a video news conference on Wednesday.
Not every state is ready to agree. Washington state Attorney General Bob Ferguson said he would reject the deal as “inadequate” and would proceed with a trial on claims against the distributors beginning in September.
Grant Woods, a former Arizona Attorney General who has been involved in both tobacco and opioid lawsuits, said the difference this time is that “everybody wants this money to go toward opioids and shortages across the country”.
The deal will be part of an ongoing effort to address the nationwide opioid addiction and overdose crisis. Prescription drugs and illicit heroin and illicitly produced fentanyl have been linked to more than 500,000 deaths in the US since 2000. The number of cases reached a record high in 2020.
If approved, the settlement is likely to be the largest in the ongoing opioid litigation across the country. It is expected to bring in more than $23 billion in reduction and mitigation efforts to help treat addicts, along with other programs to tackle the crisis. The money would come in 18 annual payments, the largest amount over the next several years.
This is likely to be the largest group of settlements, but other companies, including OxyContin maker Purdue Pharma, generic drug maker Mallinckrodt and consulting firm McKinsey, have all reached or nearly reached national settlements on opioids as well. Some drug manufacturers, small distributors and pharmacy companies are still being sued by thousands of government entities.
A group of advocacy organizations, public health experts and others are pushing governments to sign off on a set of principles governing how settlement money should be used. These include setting up a dedicated fund to combat the pandemic with settlement money and ensuring that it does not replace other funding streams in the budget.
The group has pointed out that many state and local governments have already cut substance abuse and behavioral health programs because of the economic slowdown triggered by the coronavirus pandemic. And government officials may be tempted to fill holes in the budget with money.
Joshua Scharfstein, vice dean of the Johns Hopkins Bloomberg School of Public Health, said it is important that money is spent tackling the opioid crisis as the overdose epidemic rages.
Last year, there were a record 93,000 fatal overdoses from all drugs in the US, most of them involving fentanyl, a potent synthetic opioid that has medical uses but is also produced illegally.
“Everyone is both excited and a little worried,” Scharfstein said of the expected funds, “a little worried that they might go to waste.”
Paul Geller, an attorney representing local governments, said the settlement’s structure ensures the funds will be used as intended.
“It will not be used to fill potholes or build libraries or balance budgets,” Geller said.
A significant portion of tobacco disposal money has been spent on such things, according to the Campaign for Tobacco Free Kids, which tracks the money.
Campaign president Matthew L. Myers said tobacco disposal is “one of the biggest missed public health opportunities of our lifetimes.”
“We could have saved massively more lives,” he said if more money was spent on cessation and prevention.
The settlement was the result of states seeking to offset health care costs associated with tobacco-related diseases, while the industry accused the public of misleading the public.
Joel Lester, director of commercial tobacco control programs at the Public Health Law Center in Minnesota, said the tobacco disposal was “both a huge success and a cautionary tale.”
This led to a rise in cigarette prices, which led to a drop in smoking rates. Marketing, especially to children, was banned. And according to the American Lung Association, adult smoking fell from 24.1% in 1998 to 13.7% in 2018.
But the money that was diverted could still make a big difference, she said.
“People negotiating these settlements have to keep their focus on health and the destruction they are causing to communities,” she said of industry settlements in general. “Each element of the settlement must either attempt to remove the damage caused by it or prevent it from continuing.”
Finlay reported from Norfolk, Virginia and Mulvihill from Cherry Hill, New Jersey.