Underprepared: Opioid Settlement Dollars are Coming

Past public health crises have led to significant settlements. The 1998 Tobacco Master Settlement Agreement, for instance, was heralded as a landmark deal. Major tobacco companies agreed to pay billions to 46 U.S. states, funds that were ostensibly earmarked for anti-smoking campaigns and health programs. Yet, as research from RAND later revealed, a significant portion of these funds were diverted to unrelated projects. The promise of a healthier future was overshadowed by the allure of immediate fiscal relief, a misstep that has had lasting implications and begs the question. Will the opioid settlement reach the same result or have states learned their lesson?

Recent Concerns

Probably not, as the misuse of settlement funds remains a concern:

•COVID Funds Misdirection: In a move that sparked controversy, some states opted to use COVID relief funds for prisons, diverting resources from pandemic relief efforts. This decision underscores the tension between immediate fiscal needs and long-term public health goals.

•Mendocino County's Opioid Funds Dilemma: In a decision that drew sharp criticism, especially from those directly affected by the opioid crisis, Mendocino County used over $63,000 of opioid settlement funds to address a budget shortfall, despite having the highest rate of overdose deaths in California.

•New York's Opioid Funds Controversy: Raising eyebrows and questions about the state's priorities, funds intended for opioid crisis mitigation in New York were instead used for overtime expenses related to narcotics investigations.

The Current Landscape

While the anticipated $50 billion from opioid lawsuits offers hope, the lack of standardization and oversight in fund distribution is concerning. The primary objective of these funds is to bolster prevention, treatment, and recovery infrastructure, but it is feared that the absence of clear guidelines and reporting mechanisms will lead to misallocation and abuse. Only 12 states have committed to detailed reporting, emphasizing the need for transparency.

The Profit-Driven Rehab Industry's Ethical Crisis

Challenges posed by the profit-driven rehab industry in the U.S. include aggressive sales techniques, overcharging, and substandard care. The system often pushes vulnerable individuals into treatments that may not be in their best interest. The Affordable Care Act, while praised for mandating private insurance programs to cover addiction treatments, inadvertently led to a surge in for-profit rehab clinics, some of which prioritize profit over patient care, further emphasizing the need for rigorous oversight and quality standards. Few state officials are familiar with these market and health landscape dynamics, meaning few officials are ready to offer the necessary oversight of these dollars and the programs they’ll be going to support. That includes drug court programs.

A recent investigation by Spotlight PA highlighted the lax oversight of addiction treatment facilities in Pennsylvania. The Department of Drug and Alcohol Programs (DDAP) in Pennsylvania has been criticized for allowing providers to continue operating despite repeated violations and harm to clients. The tragic story of Adam Kalinowski, who died less than 24 hours after entering a treatment center known as Addiction Specialists, Inc. (ASI), serves as a poignant example. ASI had a history of violating state rules, and a wrongful death suit against them resulted in a judgment of over $1.6 million in damages.

Drug Courts

In response to surging drug-related criminal cases, drug courts have emerged as a solution, offering offenders a chance at rehabilitation instead of incarceration. However, there are serious vulnerabilities. Recent revelations in Louisiana provide an example of how lax federal oversight of the Department of Health and Human Services (HHS) grants funding of drug courts have lead to corruption, kickbacks, and questionable practices within these drug court systems and the treatment centers they refer defendants to.

In Lafayette, Louisiana, a mysterious $3 million appropriation for a substance abuse rehab facility became the epicenter of controversy. In the previous year, while the state Senate was formulating the state budget, an unusual amendment was introduced, directing $3 million to a governmental health organization in Lafayette for a 70-bed addiction treatment center. It was later revealed that three businessmen, Mark Fontenot, Jeff Richardson, and Leonard Franques, were advocating for this funding to establish a substance abuse rehabilitation facility in Lafayette. Franques is currently at the heart of an expanding bribery investigation that has implicated officials from the 15th Judicial District Attorney’s office in Lafayette, among others. The scheme involved DA Office kickbacks for steering pretrial diversion defendants to four businesses, including Lake Wellness Center, Franques' outpatient rehab facility.

The scandal in Lafayette highlights the intricate web of connections and potential conflicts of interest surrounding substance abuse rehab facilities, the justice system, and state legislatures who will be in charge of setting appropriations for these historic opioid settlement funds. Harm reduction and Justice advocates will need to work closely together in order to push for necessary “watch dog” activities and opportunities in these referral systems.

The Crisis of Medication Assisted Treatment Access for Minors

The rise of fentanyl has dramatically altered the landscape of opioid addiction. Teenagers are developing severe dependencies at an alarming rate, transitioning rapidly from experimentation to intense dependence. This swift onset of addiction underscores the urgent need for effective treatments tailored to this age group.

Despite the proven efficacy of buprenorphine, considered the gold standard for treating opioid use disorder, less than a quarter of residential treatment centers for adolescents offer it. This lack of access is deeply concerning, especially given the sharp rise in overdose deaths among teenagers, exacerbated by the proliferation of fentanyl.

Several barriers hinder the provision of MAT to minors:

•     Philosophical Objections: Some facilities object to medications like buprenorphine on philosophical grounds, despite its proven efficacy.

•     Lack of Expertise: Many treatment centers lack the necessary expertise to treat adolescents with MATs.

•     Stigma: The stigma associated with MATs, especially among teenagers, poses a significant barrier. If teenagers feel marginalized for taking medication, they might avoid it.

•     Systemic Barriers: A shortage of certified providers and underfunded facilities highlight the systemic challenges that need to be addressed to tackle the opioid crisis effectively.

The lack of MAT access for minors raises concerns about the allocation of opioid settlement funds. The funds are intended to address the opioid crisis head-on. If they aren't used to ensure access to MAT for all, including minors, public trust in the system could erode. Furthermore, without access to effective treatments and education, teenagers are at a higher risk of overdose and death. Addressing the barriers to MAT access for teenagers is crucial to ensure that the funds are used effectively and that this vulnerable population receives the care they desperately need.

The Role of the Department of Health and Human Services

The HHS plays a pivotal role in shaping the nation's response to the opioid epidemic. It oversees fund allocation, issues grants to incentivize particular programming, and sets care standards. Ensuring these standards are stringent and patient-centric is vital. State health departments face challenges, including staffing shortages, which can impact fund management.

State Health Department Challenges

State health departments, such as the North Carolina Department of Health and Human Services (NCDHHS), play a crucial role in addressing the opioid crisis at the local level. However, these departments face significant challenges, including staffing shortages and budget constraints. For instance, the NCDHHS has grappled with a 28% vacancy rate, which has doubled since the onset of COVID. Such staffing shortages can severely hamper the department's ability to manage and allocate funds effectively. These challenges have direct implications for local initiatives, such as the Queen City Harm Reduction's housing pilot program, which faced delays due to funding issues.

Lack of Guidance on Contract Quality with Local Drug Courts

While the HHS provides oversight and sets standards for care, there has been a notable lack of guidance on increasing contract quality between local drug courts, private and publicly funded managed care programs, and providers. Given the potential for conflicts of interest and corruption within the drug court system, as evidenced by the Lafayette bribery scandal, this lack of guidance is concerning. Ensuring transparency, accountability, and quality in contracts is a key factor that will ensure opioid settlement funds are effectively used at every level.

Conclusion and Call to Action

The opioid epidemic presents a monumental public health challenge. The opioid settlement funds offer a unique opportunity to address these interlinked crises. However, without stringent oversight and a clear roadmap, there's a risk that these funds might not be used to their maximum potential.

The rapid allocation of funds without proper oversight is a recipe for disaster. It's crucial to ensure that these funds are channeled into comprehensive programs that not only address OUD but also the associated risks of HIV and HCV infections.

The opioid epidemic and the associated settlement funds present both an opportunity and a challenge. Proper oversight is essential to ensure these funds are used effectively. Advocacy groups, community leaders, and stakeholders must rally together to push for rigorous HHS contract quality standards, ensuring transparency and accountability.

Opioid Settlements in America

In 2021, a group of state State Attorneys General announced a $26-billion national opioid settlement with three of the largest drug distributors—McKesson Corp., Cardinal Health, Inc., and AmerisourceBergen Corp.—and drugmaker Johnson & Johnson that would see $21b and $5b from those groups, respectively. This settlement deal was approved by all but four states—Alabama, Oklahoma, West Virginia, and Washington—and distribution of those funds began in 2022.

As with every such settlement, funds are distributed to states and municipalities, but how those funds are used is largely up to the recipients. One of the primary critiques of the 1998 Tobacco Master Settlement Agreement was that states and municipalities could use the settlement funds for any purpose. Many states, including West Virginia, used (and abused) those funds to plug holes in their budgets, fund infrastructure improvements, and, in the case of West Virginia, fund teacher pension funds. This lack of direction and oversight meant that relatively few funds actually went to provide healthcare, cessation, or prevention services. Despite this, adult smoking rates have largely plummeted since 1998 but remain relatively high in Appalachian and Midwestern states (Figure 1).

Figure 1 – Current Cigarette Use Among Adults (Behavior Risk Factor Surveillance System) 2019

Source: Centers for Disease Control and Prevention. (2021, October 22). Map of Current Cigarette Use Among Adults. https://www.cdc.gov/statesystem/cigaretteuseadult.html

Negotiators appear to have learned from that mistake, and the National Opioid Settlement is different. However, while the settlement agreement requires that 85% of the funds going directly to states and municipalities must be used for “…abatement of the opioid epidemic,” the settlement doesn’t go so far as to enumerate what qualifies as “abatement.”

According to Kaiser Family Foundation reporting, funds from the settlement are split between states and are then divided in varying percentages across state agencies, local governments, and councils that oversee opioid abatement trusts. But, there has been little transparency around the settlements, including how much each state is received, how those funds are then divided, and how those funds will be used. To date, just 15 states (Arizona, Colorado, Connecticut, Delaware, Florida, Idaho, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, North Carolina, Oregon, South Carolina, and Utah) have explicitly promised to report 100% of their Distributor and Johnson & Johnson settlement expenditures. These promises are not, however, legally binding, and recent moves by certain state administrative and legislative bodies to make private information that is statutorily mandated to be public under state Sunshine Laws bode poorly for those hoping to hold states accountable for their use of the funds.

There have been some successful efforts to track the distribution of national settlement funding out of the National Academy for State Health Policy (NASHP). Their map, however, is limited in that it only covers funds from that National Opioid Settlement, meaning that states that chose to continue pursuing additional damages (i.e., West Virginia, Alabama, Oklahoma, and Washington) are not tracked on the map. In addition to the interact map, NASHP provides a pretty comprehensive breakdown of how each state is using opioid settlement funds, including those states that did not participate in the national settlement.

Because we’re still in the early days of the settlement disbursements, there’s not really a great way to measure whether or not the funds will be successfully utilized, nor whether or not the abatement programs will actually have an impact. What we have seen outside of the settlement is that there is little consensus between states on how best to approach the continuing opioid epidemic. While some states increased access to harm reduction services, others have reduced access to, heavily regulated, or eliminated those services altogether.

In states where the opioid epidemic has become part of the fabric of life, such as Indiana, Kentucky, Ohio, and West Virginia, anecdotal reports and some limited research have found that, while additional and public health professionals are actively attempting to implement policies, plans, and interventions to openly and positively confront the opioid crisis, state residents are simply exhausted after dealing with over twenty years of devastation, loss, and both perceived and real destruction to their ways of life.

On the anecdotal front, I recently returned to Eleanor, WV, where I briefly lived and attended school and where my father taught music. What I found made my heart ache: the town’s lone shopping center essentially abandoned and left in disrepair; a middle school whose track and football field (which are still actively used by students) so destroyed that the track was little more than broken concrete loosely interspersed between fields of overgrown grass and bleachers literally tilting from rust and overuse; a set of buildings that once served as some of the town’s few apartment buildings literally burned out and boarded up with graffiti-covered plyboard; school bus stops that looked like they’d been hit by a tornado, and nobody repaired them.

We’re not talking about a major metropolitan area—we’re talking about a town of just over 1,500 residents that carries the moniker, “The Cleanest Town in West Virginia.” And the devastation didn’t stop there. I spent the next hour or so driving along the routes I used to travel as a kid and teenager, and every place that once held a great memory for me was absolutely destroyed or so badly damaged as to be wholly unrecognizable.

When I go through Facebook to check on friends from my time in Eleanor, a significant percentage of them are either recovering, in active use, or have lost their lives to the opioid epidemic. Even after working in the public health and advocacy space for more than fifteen years, the realities sometimes feel remote, and this drive allowed me to see what the opioid epidemic has done to West Virginia: it has deprived us of hope that things can or will get better. What’s more, our state legislature seems determined to make things worse.

These are the states and towns where opioid settlement funds are desperately needed, but it’s unclear whether or not they will receive or utilize them well. I know that I will be actively following how these funds are used in Appalachia, particularly in my capacity as Founder and Executive Director of the Appalachian Learning Initiative (APPLI, pronounced like “apply”).