BBG’s Community Partner Mountain State Spotlight explains: How will West Virginia spend $1 billion in opioid settlement cash?
By Allen Siegler, Mountain State Spotlight
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Over the past few years, West Virginians have seen headline after headline detailing lawsuits against the retailers, manufacturers and distributors who fueled the state’s opioid crisis. From CVS and Walmart: $147 million. From Johnson & Johnson: $99 million. From distributors Cardinal, McKesson and AmerisourceBergen: $400 million.
But often lost amid the headlines are the details of where all this money is going to go and how it’s going to help the West Virginians most affected by the public health crisis.
Former state health officer Cathy Slemp thinks the massive amount of money coming into the state represents an opportunity.
“You’ve got to immediately save lives and [think about] how do we slow down the need for folks to turn to drugs,” she said.
While almost all of the state’s local towns, cities and counties have agreed to a general distribution plan, what exactly the funds will do has not yet been determined. Those decisions will be different depending on the county you’re in, and could have monumental impacts on people’s lives.
We break the status of the trials, who will receive the money and how these decisions will impact people across the state.
How much money will West Virginia get?
So far, West Virginia has received payments from pharmacy retailers Walmart, CVS and Rite Aid; prescription drug manufacturers Endo Health Solutions, Janssen Pharmaceuticals, Teva Pharmaceutical Industries and Allergan; drug distributors AmerisourceBergen, Cardinal Health and McKesson; and management consulting firm McKinsey & Company.
Together, those settlements total to around $847 million, plus a supply of the harm reduction-drug naloxone from Teva worth an estimated $27 million. Paul Farrell Jr., a lawyer who has served as co-lead attorney on many of the state and federal trials, believes the ultimate settlement value will increase to more than a billion dollars as ongoing West Virginia lawsuits against Walgreens and Kroger come to conclusions.
How will the money get to West Virginians?
The attorney general and almost all West Virginia municipalities agreed to a contract, the West Virginia First Memorandum of Understanding, earlier this year. Seven municipalities — Camden on Gauley, Davy, Hedgesville, Leon, Meadow Bridge, Reedsville and Westover — have not yet signed the document, according to Attorney General Patrick Morrisey.
Among other guidelines, the memorandum illustrates how funds will be split between long-term and short term use, how the short term funds will be allocated to local governments, and how local governments can spend their share.
The bulk of the money — 72.5% — will go toward a nonprofit called the West Virginia First Foundation. The foundation will oversee hundreds of millions of dollars; it will be led by five appointees selected by the governor and approved by the West Virginia Senate, as well as six regional representatives. An expert panel, made up of health and law enforcement experts, will advise the 11 foundation leaders on how to effectively implement prevention and treatment programs throughout the state.
Drema Hill, a health care administrator who is being paid by Morrisey’s office to help work out the details of the agreement, believes directing money to this nonprofit will protect the funds from dissipating, like she saw happen to tobacco settlement funds when she was working at the Department of Health and Human Resources in 2018.
“We’re stuck when we lose our programming, when we don’t have funding anymore,” she said.
While Hill acknowledged the appointee system could enable some political interference, she cited the expert panel and the foundation’s transparency and evaluation requirements as reasons why it’s less likely this money will parallel the tobacco settlement money. And while the exact ways the foundation will operate can only be determined once its leaders are selected, she hopes it will consider multi-year funding instead of requiring annual renewal.
Her idea of the foundation’s best-case scenario is the leaders consistently awarding money to fund and increase the state’s addiction prevention and treatment best practices, including harm reduction programs. Her worst-case scenario would be if legislators step in and try to take the money for their own budget.
“Being a public health person for 30 years, I know that opioids and substance abuse are public health issues,” she said. “We need to let public health experts deal with it.”
How do local governments get money?
Local governments will split about 25% of the money. Those funds will be distributed over the next few years, depending on the stipulations of each settlement.
The local government share calculations account for a place’s population size, number of prescription opiates received, and overdose death count, according to Farrell. Cities and their counties also have the option of pooling or reallocating their shares among themselves.
If the settlement totals were to end right now, the memorandum would provide Raleigh County, an area that over the past seven years has had among the largest populations and overdose death rates in the state, with just under $11 million. Pennsboro, a small town in a county with a lower overdose death rate, would get about $720.
How can the money be used?
Two sections of the memorandum list the many ways local governments can spend their share of the settlements.
Among the strategies the document lists as priorities are expanding access to medication-assisted treatment, including for at-risk groups like pregnant or incarcerated people. It also encourages counties to bolster their opiate prevention efforts, neonatal abstinence syndrome treatment, and holistic services like mental health counseling or transportation. Regional jail fees are also an acceptable use of the money. And both Hill and Farrell said that while not specifically line-itemed, harm reduction programs like needle-exchanges are also acceptable uses of the local shares.
How should the money be used?
In 2018, The New York Times surveyed 30 law enforcement, government and public health experts on how best to use opioid settlement money. As a whole, the experts suggested funding evidence-based treatment options, holistic prevention programs, harm reduction services and supply restriction efforts. None of the experts suggested diverting money to further incarcerate people.
Dr. Daniel Ciccarone, a Family Community Medicine professor at the University of California, San Francisco and one of the experts interviewed in that survey, thinks making buprenorphine, a medication-assisted treatment that relieves withdrawal symptoms, more accessible is essential.
“We have to challenge the people who say abstinence is the only way,” he said. “We have to constantly challenge them and say ‘what do you do for the people who aren’t able or ready or willing to do that?’”
Why is West Virginia filing its own lawsuits, as opposed to joining national ones?
When states first filed lawsuits against companies believed to be complicit in the epidemic, West Virginia had two options: join with other states in collective lawsuits, or file their own. West Virginia has opted for the latter option.
According to Farrell, if West Virginia had partnered with other states for these cases, the state would have received less than 1% of the national settlements. Farrell said that, because of the devastating impact of opioids on West Virginians, both he and Morrisey objected to that allocation and filed their own lawsuits.
He believes that choice is paying off.
“I expect us to recover in excess of 2% of what the national award is,” he said. “Based on our population compared to the harms we’ve suffered, I think [that] is more than fair.”
What’s going on with Huntington and Cabell County?
In 2020, to set a precedent for more than 3,000 similar lawsuits across the country, a federal judge selected a Huntington and Cabell County lawsuit against AmerisourceBergen, Cardinal Health and McKesson to be tried in West Virginia. According to Farrell, the trial was used to test what legal responsibilities the drug distributors have for the opioid epidemic. The plaintiff lawyers accused the companies of facilitating a public nuisance that would cost the county $2.5 billion to abate.
The case went to trial. Last July, a year after each side’s lawyers made their final remarks, U.S. District Judge David Faber ruled in favor of the distributors. The case not only denied financial assistance to the two local governments but also excluded them from a $400 million settlement the three companies agreed to with the state the following month.
Although Huntington and Cabell won’t receive any money from the $400 million settlement, they will still get money shares from the others. Farrell said his team would file an appeal on Faber’s ruling sometime in the next few weeks.
Reach reporter Allen Siegler at email@example.com