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5.11.
CC Regular Session
Meeting Date:
12/14/2021
Submitted For:
Kurt Ulrich
By:
Colleen Lasher, Administrative Services

Information

Title

Adopt Resolution #21-359 Approving the Memorandum of Agreement (MOA) Between the State of Minnesota and Local Governments and Authorizing Participation in National Opioid Settlement 

Purpose/Background:

The City of Ramsey received a notice from the Minnesota Attorney General (see attached)  in regard to participating in the National Opioid Settlement Agreement.

Overview:
After years of negotiations, two proposed nationwide settlement agreements (“Settlements”) have been reached that would resolve all opioid litigation brought by states and local political subdivisions against the three largest pharmaceutical distributors, McKesson, Cardinal Health and AmerisourceBergen (“Distributors”), and one manufacturer, Janssen Pharmaceuticals, Inc., and its parent company Johnson & Johnson (collectively, “Janssen”).

The proposed Settlements require the Distributors and Janssen to pay billions of dollars to abate the opioid epidemic. Specifically, the Settlements require the Distributors to pay up to $21 billion over 18 years and Janssen to pay up to $5 billion over no more than 9 years, for a total of $26 billion (the “Settlement Amount”). Of the Settlement Amount, approximately $22.7 billion is earmarked for use by participating states and subdivisions to remediate and abate the impacts of the opioid crisis.

The Settlements also contain injunctive relief provisions governing the opioid marketing, sale and distribution practices at the heart of the states’ and subdivisions’ lawsuits and further require the Distributors to implement additional safeguards to prevent diversion of prescription opioids.

Each of the proposed Settlements has two key participation steps.  First, each state decides whether to participate in the Settlement. Minnesota has joined both Settlements. Second, the subdivisions within each participating state must then decide whether to participate in the Settlements.  Generally, the more subdivisions that participate, the greater the amount of funds that flow to that state and its participating subdivisions.  Any subdivision that does not participate cannot directly share in any of the settlement funds, even if the subdivision’s state is settling and other participating subdivisions are sharing in settlement funds.

This letter is part of the formal notice required by the Settlements.

Allocation of Settlement Funds:
 

The settlement funds are first divided among the participating states according to a formula developed by the Attorneys General that considers population and the severity of harm caused by the opioid epidemic in each participating state. Each state’s share of the abatement funds is then further allocated within each state according to agreement between the state and its subdivisions, applicable state allocation legislation, or, in the absence of these, the default provisions in the agreements.


legislation can be found on the national settlement website as well as on the Minnesota Attorney General’s website.  The allocation section of the national website will be supplemented as more intra-state allocation arrangements are finalized.opioidsMany states have or are in the process of reaching an agreement on how to allocate abatement funds within the states.  Information about Minnesota’s


In reviewing allocation information, please note that while all subdivisions may participate in the Settlements, not all subdivisions are eligible to receive direct payments. To promote efficiency in the use of abatement funds and avoid administratively burdensome disbursements that would be too small to add a meaningful abatement response, certain smaller subdivisions do not automatically receive a direct allocation. However, participation by such subdivisions will help maximize the amount of abatement funds being paid in the Settlements, including those going to counties, cities, parishes, and other larger subdivisions in their communities.


In some states there will be a proposed state-subdivision agreement that is in the process of being adopted by subdivisions. Any questions concerning the status or terms of the state-subdivision agreement, allocation statute, and/or statutory trust in your state, if applicable, can be directed to the Attorney General’s Office.


You may be contacted by the Attorney General’s Office with additional information regarding the allocation of settlement funds in Minnesota.  Subdivisions with representation can expect information from their attorneys as well.  We encourage you to review all materials and to follow up with any questions. The terms of these Settlements are complex and we want to be sure you have all the information you need to make your participation decision. 

 
The League of Minnesota Cities (LMC) is participating on an advisory panel that will make recommendations for a statewide framework for the allocation and use of funds to be received from national opioid lawsuits. The plan presented would override the default allocation plans derived from the national litigation where direct payments would be sent to individual cities with populations over 10,000. 

LMC Key Points to note:
• Cities and counties have until Jan. 2, 2022, to sign onto a settlement agreement negotiated against a Pharmaceutical Supply Chain Participant in the national litigation. The more political subdivisions that sign, the more money Minnesota will receive.  
• The goal of the advisory panel is to have a statewide allocation plan agreed upon and incorporated into the settlement terms.  States across the country are developing unique allocation plans and Minnesota’s advisory panel is reviewing all for ideas and templates.
• Any Opioid Settlement Funds received will be restricted to remediation and abatement uses.   The counties’ plan will allow for direct funding of programs (primarily public health and human services) that fit within these uses.   
• One reason provided for county specific funding is that smaller amounts divided among numerous local governments would not have as great an impact on the opioid crisis as larger blocks of money. 
• Alternative allocation plans are being created and will be reviewed by the advisory panel.  Input is needed from individual cities on whether direct city funding versus county funding is preferable, and on any suggested terms for city access and administration of Opioid Settlement Funds

Why City Should Participate

The Attorney General's notice listed the following reasons to participate:
A vast majority of states have joined the Settlements, and attorneys for many subdivisions have already announced support for them. For example, the Plaintiffs’ Executive Committee, charged with leading the litigation on behalf of more than 3,000 cities, counties and others against the opioid industry, and consolidated in the national multi-district litigation (“MDL”) pending before Judge Dan Aaron Polster in the Northern District of Ohio, recommends participation in these Settlements.

Subdivision participation is strongly encouraged, for the following reasons:

First, the amounts to be paid under the Settlements, while insufficient to abate the epidemic fully, will allow state and local governments to commence with meaningful change designed to curb opioid addiction, overdose and death;

Second, time is of the essence.  The opioid epidemic continues to devastate communities around the country and it is critical that the funds begin to flow to allow governments to address the epidemic in their communities as soon as possible;

Third, if there is not sufficient subdivision participation in these proposed Settlements, the Settlements will not be finalized, the important business practice changes will not be implemented, the billions of dollars in abatement funds will not flow to communities, and more than 3,000 cases may be sent back to their home courts for trial, which will take many years;

Fourth, the extent of participation also will determine how much money each state and its local subdivisions will receive because approximately half of the abatement funds are in the form of “incentive payments,” i.e., the higher the participation of subdivisions in a state, the greater the amount of settlement funds that flow into that state;

Fifth, you know first-hand the effects of the opioid epidemic on your community. Funds from these Settlements will be used to commence abatement of the crisis and provide relief to your citizens while litigation and settlement discussions proceed against numerous other defendants in the opioid industry; and

Sixth, because pills do not respect boundaries, the opioid epidemic is a national crisis that needs a national solution.


 

Notification:

Not applicable.

Observations/Alternatives:

The City's Fire Chief, Police Chief, City Attorney, and City Administrator have reviewed this information and recommend that the City Council authorize the City Administrator to execute documents necessary for the City to participate in the National Opioid Settlement Agreement as described in the attached documents.

Funding Source:

Not applicable.

Recommendation:

It is recommended that the City Council authorize the City Administrator to execute documents necessary for the City to participate in the National Opioid Settlement Agreement as outlined by the Minnesota Attorney General.

Action:

Adopt Resolution #21-359 Approving the Memorandum of Agreement (MOA) Between the State of Minnesota and Local Governments and Authorizing Participation in National Opioid Settlement 

Attachments

Form Review

Inbox Reviewed By Date
Kurt Ulrich Kurt Ulrich 11/17/2021 01:49 PM
Kurt Ulrich Kathy Schmitz 12/09/2021 02:39 PM
Colleen Lasher (Originator) Kathy Schmitz 12/09/2021 02:39 PM
Kurt Ulrich Kurt Ulrich 12/09/2021 03:22 PM
Kurt Ulrich Kurt Ulrich 12/09/2021 03:23 PM
Form Started By:
Colleen Lasher
Started On:
11/16/2021 02:24 PM
Final Approval Date:
12/09/2021