How the National Opioid Settlement Will Affect Berks County

Cody L. Kauffman, Esq.

The devastating effects of the opioid epidemic have been felt nationwide. Berks County, like most parts of the Country, has not been immune to the impact that the opioid epidemic has had on municipalities. Notably, in 2021, Berks County found its overdose death rate to exceed the national average. The difficulty in fighting the opioid epidemic has been compounded in recent years with the ever-growing prevalence of Fentanyl and the unique challenges posed by the COVID pandemic. Faced with these growing difficulties, many states and local political subdivisions decided to pursue litigation against opioid pharmaceutical distributors and manufacturers to secure some measure of relief against the unrelenting challenges posed by opioids on communities.

In what has collectively become known as the “National Opioid Settlement,” nationwide settlements have been reached to resolve all litigation against the three largest pharmaceutical distributors: McKesson, Cardinal Health, and AmerisourceBergen (“Distributors”) and manufacturer Janssen Pharmaceuticals, Inc., and its better-known parent company, Johnson & Johnson (“Manufacturers”). Berks County, as a political subdivision, was eligible for, and has agreed to participate in, the National Opioid Settlement. With money from the settlement beginning to flow through the County, this article aims to provide background on the litigation, the settlement, and, how the distributed money will be used to combat the opioid epidemic in Berks County.

As the name implies, the National Opioid Settlement is not specific to Berks County, nor to Pennsylvania for that matter. Rather, the settlement was a product of negotiations that involved a bipartisan group of State Attorney Generals. Prior to agreeing to the settlement, negotiations had been ongoing for many years. The settlement resolves over 4,000 claims of local and state governments throughout the Country.

While varied in nature, the underlying allegations of most of the lawsuits involve claims of deceptive marketing practices and/or overdistribution of opioids. The Manufacturers and Distributors agreed to pay a total of $26 Billion to resolve the litigation. continued on next page

In addition to the significant monetary figure, the settlement also includes requirements for the companies to implement internal policy changes that are hoped to minimize the risk of future harm and prevent a recurrence of this public health crisis in the future. Among other things, the Distributors will be required to establish an independent clearinghouse that will provide the Distributors and regulators with data analytics that establish where the opioids are going and how often. Additionally, Johnson & Johnson has agreed to stop selling opioids for at least 10 years and to further not fund, promote, or lobby activities relating to opioids.

As mentioned, the total amount of the settlement is $26 Billion and is structured as follows. The Distributors will be required to pay a total of $21 Billion over a total of 18 years. Johnson & Johnson will be required to pay a total of $5 Billion over 9 years. The combined maximum value of the settlement for Pennsylvania was just over $1 Billion, specifically, $1,070,609,642. The term “maximum value” is used because the total settlement value is participation-based: i.e., the more political subdivisions that participate in the settlement, the higher the total settlement value for Pennsylvania. The Pennsylvania entities eligible to participate in the settlement include the State, Counties, municipalities with a population of 10,000 or more, and certain special districts that include large school districts and health/hospital districts. The settlement includes those entities which have previously pursued litigation against the manufacturers/distributors and also those who have not. All 67 Pennsylvania Counties have signed on to participate in the settlement. In Berks County, the municipalities which were eligible to participate in the settlement include Amity Township, Cumru Township, Exeter Township, Muhlenberg Township, the City of Reading, Spring Township, and Wyomissing Borough.

Like the 67 counties, all seven eligible Berks County municipalities have joined the settlement. In short, Berks County has done its part to maximize the settlement proceeds flowing to the County. Additionally, District Attorney John Adams, by virtue of his previously filed litigation against the Distributors and Manufacturers, will be eligible to receive additional settlement proceeds for his Office. While the settlement proceeds will ultimately flow through the County and not directly to each eligible municipality, their participation plays a key role in ensuring the settlement dollars are maximized for Berks County. Those municipalities, like all others in Berks County, will realize the benefit of the settlement dollars when they are disbursed through the County.

Of the just over $1 billion that will be distributed to Pennsylvania, 70% of those proceeds will be going directly to the Counties. The intra-County allocation is determined by various opioid-related metrics. The metrics that determine the total allocation for each County include overdose deaths, overdose hospitalizations, Naloxone Administrations, and Morphine Milligram Equivalents (MME) adjustment. Based upon those metrics, Berks County has been determined

to receive 1.88% of the Pennsylvania settlement proceeds earmarked for Counties. This equates to just over $13 million for Berks County, $13,153,973.96 to be exact. Of the remaining 30% of the settlement proceeds, 15% will be going to litigating entities (i.e., entities who have previously filed litigation against the Distributors/Manufactures), while the remaining 15% will be controlled by the Legislature.

The funds will be disbursed directly to the counties via the Pennsylvania Opioid Misuse and Addition Abatement Trust (“Trust”). The Trust was created by virtue of the Commonwealth Court formally entering the Consent Judgement Order, which formalized the settlements and formally created the Trust. The Trust will function as the overseer of the settlement proceeds both in distributing the funds and ensuring they are used properly. The trust is comprised of a chairperson appointed by the Governor, a secretary of one of Pennsylvania’s health & human services agencies, four legislative member trustees, and seven regional trustees. Berks County is a member of the Settlement’s Capital Region, which consists of Adams, Berks, Centre, Cumberland, Dauphin, Fulton, Franklin, Huntingdon, Juniata, Lancaster, Lebanon, Mifflin, Perry, Snyder, Union, and York Counties. Commissioner Robert Postal of Mifflin County has been selected as the Capital Regional trustee to serve on the Trust.

As mentioned, the Trust will oversee how the settlement dollars are spent to ensure they are used for permissible purposes. The opioid settlement differs from previous settlements, such as the tobacco settlement, in that the funds must be used for opioid remediation and future opioid abatement practices. The funds cannot be used for purposes unrelated to opioid remediation. The settlement specifically outlines agreed-upon usages of the funds, within “Exhibit E” to the settlement agreement. Exhibit E outlines the specific purposes for which the funds can be used. A key focus of the settlement was that the funds must be used to address the opioid epidemic and the structure of the settlement ensures that the monies can only be used for approved opioid remediation/abatement purposes. The settlements include strict reporting requirements to ensure the funds are not improperly spent. The Trust will be establishing channels of communication so that Counties can confirm that intended usages of the funds are indeed eligible under the terms of the settlement.

Now that the Courts have signed off on the settlement agreements and the Trust has been formally created, Counties have begun to see the settlement proceeds. Berks County received its first payment of $538,130.62 from the Trust in early September 2022.

Recognizing the importance of ensuring the funds were administered in a way that maximized their impact, Berks County has contracted with the Council on Chemical Abuse (COCA) to administer the opioid settlement funds in Berks County. COCA, as the single county authority in Berks County, has been working to prevent substance use and promote treatment and recovery from addiction since 1971.

From the County’s perspective, having COCA administer the opioid settlement funds was a logical choice. COCA’s expertise in the field will ensure the opioid settlement funds are not just allocated but allocated effectively.

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How the funds will be distributed in Berks County will be guided by the “core abatement strategies” outlined within Exhibit E to the Settlement Agreement. Those core strategies are as follows:

• Expanding training, and increasing distribution, for the use of Naloxone or other approved drugs to reverse opioid overdoses. • Increase distribution, provide education & awareness training, and provide treatment and recovery support services for

Medication-Assisted Treatment (MAT) and other opioid-related treatment. • Provide comprehensive evidence-based treatment and services, including expanding Screening, Brief Intervention, and

Referral to Treatment (SBIRT) services, for pregnant & postpartum women with co-occurring Opioid Use Disorder (OUD) and other Substance Use Disorders (SUD). • Expanding treatment, services, and recovery support for Neonatal Abstinence Syndrome. • Expansion of warm hand-off programs and recovery services. • Treatment for incarcerated populations to include treatment and recovery support to inmates and those transitioning out of the criminal justice system with OUD and co-occurring SUD/MH disorders. • Funding for prevention programs to include media campaigns to prevent opioid use, school prevention programs, medical provider education for best practices, community drug disposal programs, and training for first responders to participate in services that connect at-risk individuals to behavioral health services/support. • Expanding syringe service programs to include access to sterile syringes and linkage to care and treatment of infectious diseases. • Data Collection and Research to analyze the effectiveness of the abatement strategies within the State.

In speaking at a Berks County operations meeting before the Berks County Board of Commissioners, COCA’s Executive Director, Stanley Papademetriou, outlined COCA’s overall strategy for administering the settlement funds in Berks County. In formulating the strategy, COCA and Papademetriou closely reviewed the parameters of Exhibit E and worked to create a strategy consistent with the core strategies outlined in the settlement agreement. Importantly, COCA acknowledged that the opioid crisis is not a geo-specific problem within the County, but rather, one that is ubiquitous and indiscriminate. Due to this, COCA’s implementation of the settlement funds will be focused on ensuring the funds are used to provide benefits countywide. To that end, COCA plans to utilize the valuable relationships they have fostered with local providers to ensure the funds are getting to where they belong and are needed: the Berks County Community. Papademetriou outlined that the guiding principles for how the funds will be administered in Berks County include addressing existing service gaps, sustaining those services that have proven to be effective, and collaborative community efforts with organizations such as the SOS Berks Opioid Coalition.

COCA used these principles to create three main strategies for how the settlement funds will be utilized: Treatment (treating OUD, supporting those in treatment and recovery, and connecting those who need help to appropriate services), Prevention (prevention of opioid misuse, prevention of overdose deaths and other harms, and safe medication

management), and miscellaneous strategies including support for first responders, training and workforce development, participation in research and evaluation. COCA’s plan will be reviewed and updated yearly to ensure progress is being made toward their goals and the funds are being maximized. As the needs of the Community evolve, so too will how the funds are administered. COCA has, and will continue to, work closely with Berks County’s leadership to ensure the funds are administered in a manner consistent with the core strategies outlined within Exhibit E that best maximize the settlement funds in Berks County.

While the opioid epidemic will undoubtedly continue to present challenges on a national and local level, the National Opioid Settlement funds are a welcome and valuable addition to the battle against opioids. Due to the cooperation of all eligible municipalities throughout the County and the County’s subsequent partnership with COCA to administer the funds, Berks County is in a strong position to ensure the impact and effectiveness of these funds are maximized. The opioid epidemic has not discriminated, with its impact being felt by all communities in Berks County. Through the use of these settlement funds, the County and COCA are committed to ensuring the dollars serve our communities, our residents, and those who work tirelessly to fight this battle. While disbursed directly to the County, these settlement dollars belong collectively to the County’s communities, residents, and providers. It is the County’s goal to remain as transparent as possible with how the settlement funds are administered. We welcome input from the Community regarding how the dollars should be spent. Administering these funds is a tremendous responsibility, which presents an equally tremendous opportunity to make a difference. It will take a collective effort to combat the evolving opioid crisis, but with the assistance of the settlement funds, the County and COCA are committed to ensuring Berks County realizes the full potential of these dollars.

Sources: https://nationalopioidsettlement.com/executive-summary/ https://www.wakegov.com/national-opioid-settlement https://www.naag.org/issues/opioids/ https://ncdoj.gov/attorney-general-josh-stein-national-opioid-settlement-finalized/ https://www.motleyrice.com/article/26-billion-settlement-opioid-distributors-jj https://www.doj.state.wi.us/news-releases/drug-distributors-and-johnson-johnson-commit-26-billion-opioid-agreement https://www.readingeagle.com/2022/03/29/berks-county-receive-16-million-opioid-settlement/

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