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A Brief Overview of the Opioids Settlements

Christopher Teters

Assistant Attorney General, Office of the Kansas Attorney General

This presentation is the property of the Office of the Kansas Attorney General and is for educational and informational use only. Do not disseminate or broadcast this presentation without prior written permission.

 

Information in this presentation is provided as a public service to enhance public education and is accurate as of January 18, 2024.  It is not intended to take the place of statutory law, regulations, or guidance documents. Such information is subject to change. The presentation is not legal advice, therefore, please  consult with your own legal counsel for legal advice and assistance with your legal matters.

KANSAS ATTORNEY GENERAL

DEREK SCHMIDT

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About Me

  • Assistant Attorney General
  • Admitted to the Bar in 2016
  • Joined the AG’s Office 2019
  • Primary Role is Opioid Litigation and Settlement Implementation
  • Subject-Matter Expert on Opioid Litigation, NOT Opioid Abatement Best Practices

​

**See disclaimer

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Outline

  • Kansas Fights Addiction Act
  • Abatement Strategies
  • Duties Under the Announced Settlements
  • Overview of Announced Settlements
  • Future Obligations and Developments

​

**See disclaimer

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Duties Under the Announced Settlements�

  • Abatement is the Exclusive Purpose
    • At least 85% of the money must go for abatement purposes
    • Under the bankruptcies no more than 5% of the money can go towards non-abatement purposes
    • We want to keep our expenses at 5% to comply with all settlements
  • Tracking and Reporting
    • Prove How the Money Was Spent
    • Report regularly to:
      • Legislature
      • Bankruptcy Trustees
      • Settlement Administrators

**See disclaimer

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Abatement Strategies

  • Each Settlement and Bankruptcy Imposes Duty to Limit Funds to Opioid (Substance Use) Abatement Purposes
  • 15-Page Abatement Strategies List from J&J/Distributors is Illustrative
  • Examples
    • Expanding access to treatment
      • In-Patient Care
      • MAT
      • Out-Patient Support Groups or Rehabilitation Programs
    • Harm Reduction
      • Warm Transfer Programs
      • OD Intervention Training for First Responders
      • NARCAN
    • Diverting SUD Patients Away From Addiction

**See disclaimer

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Kansas Fights Addiction Act

  • K.S.A. 75-775 to -781
  • Established the Kansas Fights Addiction Fund and the Municipalities Fight Addiction Fund
    • 75% of all recovery goes to the KFAF
    • 25% of all recovery goes to the MFAF
  • Established the Grant Review Board
  • Directs All Recovery to Opioid and Substance Use Abatement
  • Allowed for Contracting the Sunflower Foundation for Support and Financial Management
    • Includes temporary investment of opioid funds to maximize potential for additional resources
  • Directs $200 thousand each year to the Kansas prescription drug monitoring program (K-TRACS)

**See disclaimer

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Kansas Fights Addiction Act Structure

Opioid Recoveries

KS Fights Addiction Fund (75%)

KTRACS ($200K)

Grant Program

Municipalities Fight Addiction Fund (25%)

City Share (50%)

County Share (50%)

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Grant Review Board

  • K.S.A. 75-778 & -781
  • 11 member board appointed by a variety of stakeholders
    • 6 votes necessary to approve each grant
    • Members from each congressional district
  • May adopt rules and procedures for operation, conduct hearings, receive testimony, and gather information to assist its decision making powers, duties, and functions.
  • Annual Report
    • By March 1 of each year
    • To the Speaker, President of the Senate, Governor, and AG
    • Includes
      • Accounting of moneys deposited into and expended from the KFAF
      • Summary of each approved grant
      • Explanation of compliance
      • Any other relevant information

**See disclaimer

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Grant Evaluation Guidelines

  • K.S.A. 75-778
  • The Board shall consider 5 factors when evaluating grants
    • Not less than 1/8 of the total amount of moneys granted each calendar year is in each congressional district
    • Consider science- and data-driven substance abuse prevention, reduction, treatment, or mitigation strategies
    • Consult with the Kansas Prescription Drug and Opioid Advisory Committee, the Kansas Department of Health and Environment, the Kansas Insurance Department, and other appropriate public and private entitles to ensure coordination of drug abuse and addiction prevention and mitigation efforts
    • Approve grants to qualified applicants for projects and activates that prevent, reduce, treat or mitigate the effects of substance abuse and addiction
    • Consider the sustainability of any programming after grant funds are exhausted

​

**See disclaimer

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Grant Evaluation Guidelines

  • When evaluating grants, the Board may:
    • Establish conditions for the award of grants and require assurance and subsequent review to ensure such conditions are satisfied
    • Give preference to qualified applicants that are not otherwise seeking or receiving funds from opioid litigation
    • Give preference to grants that expand availability of certified drug abuse treatment programs authorized by K.S.A. 2021 Supp. 21-6824
      • Nonprison sanction to a certified drug abuse treatment program

**See disclaimer

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Kansas Fights Addiction Grant Review Board

  • 11 Members
  • “Require expertise in prevention, reduction, treatment, or mitigation of the effects of substance abuse and addiction”
  • Grant Evaluation Considerations:
  • Employ Sunflower Foundation for Grant Making Expertise and Grant Program Managemen

Musts

Support Services Across the state

Evaluate grants for “science and data-driven substance abuse prevention reduction, treatment or mitigation strategies”

Consult With

    • Kansas prescription drug and opioid advisory committee
    • Kansas Department of Health and Environment
    • Kansas Insurance Department
    • Other Public and Private Entities

Consider Sustainability of Program

Mays

Establish Conditions for Grants and Require Assurance of Subsequent Review

Give Preference to Applicants not Otherwise Receiving Money

Preference to Grants that Expand Availability of Certified Drug Abuse Treatment Programs, SB 123

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Municipalities Fight Addiction Fund

  • K.S.A. 75-777(d)
  • Cities and Counties that chose to participate in the Municipalities Fight Addiction Fund shall receive their share of any opioid recovery received by the state
  • Over 200 municipalities, representing over 85% of the Kansas population chose to participate
  • These payments are to be in addition to any payment a city or county seeks as part of a grant from the Board

**See disclaimer

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KFAB – 2023 Update

  • Started work on a new needs assessment
    • Evaluate what services are available
    • Identify holes in service network across the state
    • Foundation of strategic plan for future funding priorities
  • Immediate Needs Funds
    • Awarded over $10m in 2 RFPs
    • Employed the State Strategic Plan to identify target areas broadly in (a) Treatment and (b) Prevention
    • Awarded over 70 grants
  • Future Plans
    • Looking at another immediate need grant program for 2024
    • Focus on innovative solutions
    • No plans set currently

**See disclaimer

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Announced Settlements

  • Overview
    • Nine Settlements Announced
    • ~$340 million over 18 years (2 years completed)
    • Balloon and Long Tail
  • McKinsey and Associates
    • ~$4.8 million over 5 years
    • ~$4.3 million already received with two additional payments of $205K expected
  • Mallinckrodt PLC (Bankruptcy)
    • Company declared a second bankruptcy
    • Reduces our recovery to Approximately ~$2.5M
    • Money limited to abatement abatement purposes

**See disclaimer

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Announced Settlements�

  • The Distributors
    • ~$21 billion for all states
    • ~$150 million for Kansas over 18 years
    • More money earlier in the settlement than later
    • Potential for early payment
    • Uncertainty on settlement administrator expenses
  • Janssen/Johnson & Johnson
    • ~$5 billion to all states
    • ~$35 million to Kansas over 10 years
    • Nearly identical to Distributors settlement terms
    • Vast majority has been paid within the first year of the settlement

​

**See disclaimer

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Announced Settlements�

  • The Pharmacies
    • CVS: ~$37 Million
    • Walgreens: ~$40 Million
    • Walmart: ~$20 Million, paid within the first year
    • New monitoring requirements for the pharmacies on suspicious prescriptions
  • Teva & Allergan
    • Teva: ~$28m with a Naloxone Distribution component
    • Allergan: ~$16.9m
  • Endo Bankruptcy
    • Limited Assets Available for the States
    • Potentially Long Bankruptcy Process
    • Bankruptcy delayed due to creditor negotiations

​

**See disclaimer

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Announced Settlements

  • Purdue Pharma (Bankruptcy)
    • ~$5 billion to all states
    • ~$40 million to Kansas
    • Paid from between 10 to 18 years.
    • Extreme uncertainty due to current posture in the appellate courts related to release of the Sackler family.

​

**See disclaimer

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Future Developments

  • Purdue Bankruptcy in appellate limbo
  • Opioid litigation continues throughout the country with other defendants that may lead to future settlements
  • We anticipate receiving funds for well over a decade
  • Serious growing pains with the new monitoring programs and a balance to be reached

**See disclaimer

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Questions?

  • For questions outside of a public meeting, please route them through the board’s counsel, and I will answer them as soon as possible.

**See disclaimer