ITEM #: 3. DATE: 03/20/2023 AI #:1372 |
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CITY COUNCIL ACTION REPORT
SUBJECT: |
AUTHORIZE GOODYEAR’S PARTICIPATION IN THE NEW 2022 OPIOID SETTLEMENT WITH TEVA, ALLERGAN, CVS, WALGREENS, AND WALMART |
STAFF PRESENTER(S): |
Jay Karlovich, Assistant City Attorney |
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SUMMARY |
Authorize Goodyear’s participation in the new 2022 Opioid Settlement with Teva, Allergan, CVS, Walgreens, and Walmart which is similar to and a quasi-extension of the City’s participation in the 2021 One Arizona opioid settlement funds distribution agreement. |
RECOMMENDATION |
ADOPT RESOLUTION NO. 2023-2297
AUTHORIZING GOODYEAR’S PARTICIPATION IN THE NEW 2022 OPIOID SETTLEMENT WITH TEVA, ALLERGAN, CVS, WALGREENS, AND WALMART;
PROVIDING AUTHORIZATION AND DIRECTION FOR THE CITY ATTORNEY AND/OR CITY MANAGER, OR HER DESIGNEE TO TAKE ANY AND ALL ACTIONS NECESSARY IN FURTHERANCE OF OPIOID SETTLEMENTS; AND PROVIDING FOR AN EFFECTIVE DATE. (Jay Karlovich, Assistant City Attorney)
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FISCAL IMPACT |
The receipt of settlement funds will not require any matching funds or expenditures from the city. Any future settlement amounts received will be utilized as set forth in the settlement to combat the effects of the recent opioid epidemic. |
BACKGROUND AND PREVIOUS ACTIONS |
On November 8, 2021, City Council approved the City’s participation in the One Arizona Distribution of the Opioid Settlement Funds Agreement. This 2021 Opioid Settlement Agreement set forth the distribution amounts and the approved uses for settlement funds received from several opioid drug manufacturers and distributors (Johnson & Johnson/Janssen, Cardinal, AmerisourceBergen, and McKesson). The City’s participation in the 2021 Opioid Settlement (which totaled about 26 billion dollars) was estimated to provide the City with approximately $4.7 million dollars, over a period of 18 years, to be used for various programs and expenditures earmarked to combat the effects of the recent opioid epidemic. The 2021 nationwide settlements were reached to resolve all opioid litigation brought by states and local political subdivisions against the three largest pharmaceutical distributors—McKesson, Cardinal Health, and AmerisourceBergen (“Distributors”)—and against manufacturer Janssen Pharmaceuticals, Inc., and its parent company Johnson & Johnson (collectively, “J&J”). These “2021 National Settlements” have been finalized, and payments have already begun. In all, the Distributors will pay up to $21 billion over 18 years, and J&J will pay up to an additional $5 billion over no more than nine years. |
STAFF ANALYSIS |
In late 2022, agreements were announced with three pharmacy chains—CVS, Walgreens, and Walmart—and two additional manufacturers—Allergan and Teva. In January 2023, each pharmacy chain and manufacturer confirmed that a sufficient number of states have agreed to participate in the settlements to move forward. As with the 2021 National Settlements, states and local governments that want to participate in the 2022 National Settlements now will have the opportunity to “opt-in.” The greater the level of subdivision participation, the more funds that will ultimately be paid out for abatement. Assuming maximum participation, the 2022 National Settlements require:
- Teva to pay up to $3.34 billion over 13 years and to provide either $1.2 billion of its generic version of the drug Narcan over 10 years or $240 million of cash in lieu of product, as each state may elect; and
- Allergan to pay up to $2.02 billion over seven years; and
- CVS to pay up to $4.90 billion over 10 years; and
- Walgreens to pay up to $5.52 billion over 15 years; and
- Walmart to pay up to $2.74 billion in 2023, and all payments to be made within six years.
These figures include amounts attributable to prior settlements between the Defendants and certain states/subdivisions and amounts for attorneys’ fees and costs. Under both the 2021 and 2022 National Settlements, at least 85% of the funds going directly to participating states and subdivisions must be used for abatement of the opioid epidemic, with the overwhelming bulk of the proceeds restricted to funding future abatement efforts by state and local governments. In addition to providing billions of dollars for abatement, the settlements also impose changes in the way the settling defendants conduct their business. For example:
- The Distributors will create a groundbreaking clearinghouse through which they will be required to account not only for their own shipments, but also the shipments of the other distributors, in order to detect, stop, and report suspicious opioid orders; and
- J&J (which ceased marketing opioids in 2015 and ceased selling opioids in 2020) will not market or sell any opioid products in the next 10 years and has agreed to cease lobbying concerning prescription opioids for 10 years; and
- Teva and Allergan have agreed to strict limitations on their marketing, promotion, sale, and distribution of opioids, including a ban on: (1) promotion and lobbying; (2) rewarding or disciplining employees based on volume of opioid sales; and (3) funding or grants to third parties; and
- Walmart, CVS, and Walgreens are required to implement changes in how they handle opioids, including requirements addressing their compliance structures, pharmacist judgment, diversion prevention, suspicious order monitoring, and reporting on red-flag processes, as well as blocked and potentially problematic prescribers.
The 2021 and 2022 National Settlements are the culmination of many years of intense negotiations among representatives of the State Attorneys General, the court-appointed Plaintiffs’ Executive Committee and Negotiation Committee, which are comprised of lawyers in the National Prescription Opiate MDL who represent subdivisions, and counsel to the Settling Defendants. These negotiations were facilitated by Judge Dan Polster (who oversees the federal MDL litigation), by the Special Masters appointed by the MDL Court, and by experienced, neutral mediators. As mentioned above, the City’s participation in the 2021 Opioid Settlement (which totaled about 26 billion dollars) was estimated to provide the City with approximately $4.7 million dollars over an 18-year period. To date, approximately $125,000 has been received from the 2021 settlement with the funds set aside in a separate Opioid Settlement account, to be used for various programs and expenditures earmarked to combat the effects of the recent opioid epidemic. City staff estimates that participation in this new 2022 Opioid settlement with Teva, Allegan, CVS, Walgreens, and Walmart (which totals about 18.5 billion dollars) could provide the City with upwards of an additional $3.3 million dollars over a 15-year period. The first payment for this 2022 Opioid Settlement is anticipated to be received in 2024 and will again be set aside to be used for the settlement-approved programs and expenditures. |
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