When Vermont Attorney General T.J. Donovan was elected in 2017, he stated that one of his top priorities was to hold accountable the companies that were responsible for the ongoing opioid crisis. Since that time, the Vermont Attorney General’s Office has sued two opioid distributors – McKesson Corporation and Cardinal Health, Inc. – along with opioid manufacturer Purdue Pharma (and their shareholders, the Sackler Family), and engaged in multi-state investigations against a number of other companies that profited from the opioid crisis.
In July, Vermont and the other litigating states announced a historic $26 billion settlement with several of these companies to resolve thousands of opioid-crisis lawsuits and pave the way for communities across the country to secure funding to address painkiller addiction, which has reached epidemic proportions. $21 billion of the settlement involves McKesson and Cardinal Health as well as another opioid distributor, AmerisourceBergen Corporation. In addition, a settlement was reached with Johnson & Johnson, the world’s largest health care company, which manufactured and marketed opioids. The distributor agreement would also establish a clearinghouse to consolidate data from the three distributors and make it available to the settling states as part of their anti-diversion efforts. Vermont’s portion of this nationwide settlement amounts to approximately $65 million, which is to be disbursed over an 18-year span.
“This is the product of a long and arduous negotiation with the distributors and J&J,” says Deputy Attorney General Joshua Diamond. (For the purpose of the settlement, J&J comprises both Johnson & Johnson and its subsidiary, Janssen Pharmaceuticals, which is headquartered in Belgium.) “These settlements reflect a significant effort by both the states and the localities,” continues Diamond. “Vermont has been active in the investigation and litigation of the companies that caused and perpetuated the opioid crisis.”
Each state has been allocated a percentage of the Settlement Fund based on a formula that considers:
• the number of opioid overdose deaths in the state,
• the number of people in the state with Opioid Use Disorder,
• the amount of state opioid sales, and
• the state’s population.
Vermont’s share of the distributors’ settlement is 0.028 percent, or approximately $53 million over 18 years. Its share of the J&J settlement is 0.287 percent, or $12,265,249 over 10 years.
“There are two thresholds for the distributors and J&J to sign off on,” continues Diamond. “The first is that enough jurisdictions support pursuing the settlement. The vast majority – well over forty states and territories – have already done so.” The second one is a January 2, 2022, deadline, when a “critical mass” of cities, towns, and counties – the local subdivisions – must agree to the settlement by notifying the Attorney General’s Office. The National Opioids Settlement Administrator sent municipalities a notice that explains how to execute the documents necessary to accept the settlement funds. If your town has not yet received this notice, contact the Attorney General’s Office at email@example.com or 802-828-3171.
“The settlement allows Vermont cities and towns to get a direct payment, regardless of whether or not they sued,” says Diamond. The monies for any town that chooses not to approve the settlement won’t be lost but will go into a bigger statewide abatement fund to help mitigate the impacts of opioid use in the state. Municipalities will have a voice in recommending how the fund will be used by being represented on an advisory board.
In addition to Vermont’s lawsuit, four municipalities – Bennington, Brattleboro, Sharon, and St. Albans City – litigated the companies separately “to ensure we had a direct seat at the table and gained increased leverage over the use of any proceeds,” says St. Albans City Manager Dominic Cloud.
The settlement addresses only the claims of U.S. state attorneys general and political subdivisions in the participating states. The subdivisions of West Virginia – which settled previously with the distributors – and Native American tribes are not part of that agreement.
Unsurprisingly, “the companies strongly dispute the allegations made in these lawsuits but believe the proposed settlement agreement and settlement process it establishes are important steps toward achieving broad resolution of governmental opioid claims and delivering meaningful relief to communities across the United States.” (From a July 21, 2021, McKesson Corporation press release.)
Separate from the $65 million settlement, a bankruptcy judge on September 17 issued a judgment authorizing the reorganization plan for Purdue Pharma that would initiate a settlement of at least $4.5 billion from the shareholder Sackler family and resolve thousands of opioid cases. Vermont is among eight states along with the District of Columbia that continue to oppose the settlement and bankruptcy order.
“The opioid crisis still impacts Vermont,” says Diamond. “It continues to affect our communities, our families, our neighbors. Hopefully, these monies can be used to make a meaningful difference.”
For updates on the opioid settlement, visit the Opioid Settlement webpage, ago.vermont.gov/opioid-settlement/, or contact the Attorney General’s Office at firstname.lastname@example.org or 802-828-3171.
VLCT News Editor
Opioid Settlement Monies
Of the $21 billion settlement, the distributors pay:
• $19,045,346,616 over 18 years to states and subdivisions to use to abate or remediate the opioid crisis
• $1.671 billion toward attorneys’ fees and costs, including fees for the thousands of subdivisions that have sued
Of the $5 billion settlement, J&J pays:
• $4,264,615,385 over 10 years for use by states and subdivisions to abate or remediate the opioid crisis
• $465,384,615 toward attorneys’ fees and costs, to Tribes, and for potential outstanding liability of J&J pending a decision from the Oklahoma Supreme Court
Both settlements are to be allocated in three disbursements:
• 15% to a subdivision fund for state subdivisions to use to abate the opioid crisis
• 15% to a state fund for states to pay for past expenses or future abatement of the opioid crisis
• 70% to a statewide abatement fund.