This is the moment of legal reckoning for the drug companies that caused the opioid epidemic. Some of the 2000 plus lawsuits have already been settled and the rest are in active negotiations, with new headlines every day.
The crucial question from the victims’ perspective is not the global outcome of the lawsuits, but whether they result in a tangible improvement of services in each community.
The answer to this question will depend on many unpredictable unknowns. How big will the settlements be in total dollars? Over how many years will the payments be spread? How big a cut will the lawyers get? And, perhaps most important, how will the states and local jurisdictions decide how to use the money they finally receive?
Will Opioid Settlements Help Opioid Victims?
The precedents set by the Big Tobacco settlement 20 years ago are not at all promising. Although the industry was forced to cough up 250 billion dollars, it was paid very gradually over an extended period of 25 years with little money available for immediate help. There was outrage over the fees awarded to the plaintiffs’ lawyers; a rate that approached $10,000 an hour. And worst of all, the states used little of the windfall to help the actual victims of smoking or to help prevent smoking in the next generation. Instead, they spent most of the money to fund programs completely unrelated to health or to cut taxes.
The lessons: A seemingly large opioid settlement now will do very little immediate good to meet the urgent needs of current victims if it is spread over a very long period of time. And down the road, as priorities change and new politicians take office, the settlement dollars will likely be diverted away from their intended purpose. Unless strong and binding protections are built in, it is a good bet that as the years pass, fewer and fewer dollars will find their way to the opioid victims. It is not too early now, even in the midst of litigation, to claw back ill-gotten opioid dollars, to discuss how best they can be spent.
Early Settlement Victories
The opioid lawsuits are still in early days and are even more complicated than the cases that took years to settle against the tobacco industry. There are thousands of governmental plaintiffs, a wide variety of defendants, novel legal theories on both sides, and a bewildering array of different jurisdictions.
The settlements reached so far are still tentative, partial, and hard to value accurately. They also constitute far too small, selective, and early a sample to extrapolate with any degree of confidence to a predicted final national settlement total. But we can make some rough, order of magnitude, guesses to help anticipate what may be available for victims and also to put the pay-off within the context of what is already being spent on the opioid epidemic.
So far there have been 3 pioneering settlements of opioid cases: for the state of Oklahoma, for 2 counties in Ohio, and for some of plaintiffs suing Purdue Pharma and the Sackler Family. And several offers are on the table that also provide a frame for guesstimates on the size of the final settlements.
The most important fact established so far is that the drug companies involved in manufacturing, marketing, distributing, and lobbying for prescription opioids are all dead bang guilty of patently illegal behavior and that they all know it. Companies have been quick to settle existing cases, for large sums- and will almost certainly settle all future ones, without risking trials
The drug company executives and their lawyers know how incriminating their own records are, and how paper thin their legal theories in defense. The risk of large punitive damages makes it unlikely that many future cases will ever to be heard by judges and juries.
Predicting The Size Of Opioid Settlements
We also know that the settlements will be considerable. Oklahoma, a state of 5 million people, will receive about $500 million from just a few of the companies at risk, with several others on the hook for likely hundreds of millions more. Three companies settled with just two counties in Ohio for $255 million dollars. Purdue Pharma has gone bankrupt and its assets valued at up to 12 billion will go to plaintiffs. And the greedy Sackler family has already offered $3 billion, but hopefully much more will be clawed back in future litigation or negotiation.
Recently, some of the drug companies made an offer of $48 billion to resolve all future claims of the 2000 plaintiffs. This is clearly a low ball bid in the early stages of ongoing hard ball negotiations. I also expect we will be hearing about lots of individual settlements as the differences in the diverging plaintiffs’ interests lead to different reactions to defense settlement offers. Smaller, financially strapped, jurisdictions will be more eager to settle for a quick win that allows them to take the money and run. Larger jurisdictions, with deeper pockets, can go toe to toe with Big Pharma over longer periods and are thus likely ultimately to extract much fairer and more generous settlements.
Plaintiffs’ lawyers and states’ attorneys general may not always have as their primary concern the best interests of the victims. Quick money and political fortune may be irresistible temptations to early settlements, well short of what may be fairly due to victims.
The period of settlement is almost as important to victims as its ultimate size. The 25 years negotiated by Big Tobacco was clearly too long. Fifteen years strikes a better balance between what companies can afford to pay on an annual basis and immediate victim need.
Extrapolating very roughly from existing initial partial settlements to a final total national payback is pure speculation. But my best guess would be something between $100-150 billion dollars for the country as a whole, spread over about 20 years. Healthy, but just a fraction of the Big Tobacco settlement.
After the lawyers get their cut, it is likely the settlements will yield something a bit over $5 billion a year to be shared among the 2000 plus governmental plaintiffs. In the very unlikely event that all this money found its way to direct medical and addiction services for the more than 1 million people addicted to opioids, each would receive the equivalent of about $5000 a year in additional services.
Putting Settlement Dollars In Context
The crucial question is how dramatic can be the impact of about $5 billion/year opioid settlement money in the context of an opioid epidemic that is already costing the United States a fortune. Will the settlement money help us score a touchdown against the epidemic? Or at least a first down? Or will it just be an imperceptible drop in the bucket. And will the money be spent wisely?
A recent estimate suggests that the total cost of the opioid epidemic in the United States is between $150-200 billion a year- including moneys from lost earnings and early death. Current Medicaid and Medicare health costs are estimated at about $50 billions per year- with the average opioid dependent patient costing about twice the average non-dependent patient. Corrections expenditures are also in the several tens of billions per year. The federal government currently has 57 different agency programs related to opioids totaling $11 billion/year- 2/3 are health related and about $2 billion in grants from SAMHSA help states and communities develop model programs.
How Should The Money Be Spent?
An additional $5 billion/year from opioid settlement money could be the straw that stirs the cup- or it could be an insignificant non-contributor. It all depends on whether and how the money is spent.
There are already some good signs and some bad signs. The lesson from the tobacco settlement has been learned by victims’ advocates that capturing a large settlement is only half the battle. And local jurisdictions are so hip deep in opioid problems, they are much less likely to want to divert funds intended to help victims- or to be able to get away with it, even if they wanted to.
But the Oklahoma settlement sets a terrible precedent of irresponsible boondoggling. A very large chunk of the money will go to Oklahoma State University to fund a massive opioid center. I smell at the heart of this decision an enthusiastic alum feathering his school’s nest- rather than a responsible politician trying to do his best to provide services for the state’s victims.
The question is how to avoid this kind of political chumminess and expediency in the use of opioid settlement money? I am no lawyer, but would hope that the settlement agreements could be written in a way that forever binds the jurisdictions to use the money received exclusively for direct service and prevention programs- not for tax cuts or unrelated programs.
The 2000 jurisdictions collecting the settlement money will need all the help they can get in spending it wisely. SAMHSA to the rescue. It would be desirable for SAMHSA to greatly expand its already existing coordinating role- encouraging the development of model programs; establishing and disseminating best practices, and providing quality control.
I don’t think the settlement money by itself can go very far in dealing with the opioid terrors of the future. Fentanyl is a monster drug that has changed the whole landscape and requires radical new legalization approaches. But spent well, the money can be the much needed catalyst toward developing a national network of community addiction services that makes access to care available for everyone who needs it. This is late breaking stuff. We may know a lot more in the next month or two.