HomeMy WebLinkAbout01 RESOLUTION TO JOIN NATIONAL OPIOID SETTLEMENT AGREEMENTS WITH MANUFACTURERSAgenda Item
Reviewed:
City Manager
Finance Director N/A
MEETING DATE: APRIL 12, 2023
TO: HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: MATTHEW S. WEST, CITY MANAGER
SUBJECT: RESOLUTION TO JOIN NATIONAL OPIOID SETTLEMENT
AGREEMENTS WITH MANUFACTURERS TEVA AND ALLERGAN AND
PHARMACIES CVS, WALGREENS, AND WALMART
SUMMARY:
Consider whether to participate in national settlements negotiated by the California
Attorney General with manufacturers Teva and Allergan and chain pharmacies CVS,
Walgreens, and Walmart, regarding opioids.
RECOMMENDATION:
Staff recommends that the City Council:
1.Adopt the attached Resolution Approving Participation in National Settlements
With Manufacturers Teva and Allergan and Chain Pharmacies CVS, Walgreens,
and Walmart, Regarding Opioids, and the Proposed California State Subdivision
Agreement Corresponding to Each Settlement Agreement; and,
2.Authorize the City Manager to take all necessary and reasonable actions to
effectuate the City's participation, including executing all agreements and
documents, subject to the review and approval of the City Attorney.
FISCAL IMPACT:
The proposed California State Subdivision Agreements indicate that the City would
receive an allocation of the proceeds received from each settlement. The allocation
percentages are reported to be based on available federal data on opioid use disorder,
overdose deaths, and opioid shipments into California. The resulting “Weighted
Allocation Percentage” for Tustin (set forth in Exhibit 1 of each Proposed California State
Subdivision Agreement) is 0.0600341%. Specific estimated dollar amounts allocable to
Tustin are not set forth in the proposed agreements.
Payments funded per each settlement would be made over a number of years that varies
by settlement agreement, and the City would be required to use the funds for opioid
AGENDA REPORT
1
DocuSign Envelope ID: A406FE8E-3827-4D8E-AFBA-C894933ADBE2
Resolution to Join Additional National Opioid Settlements
April 12, 2023
abatement activities. If the City elects to receive direct payments, then City staff time will
be required to fulfill the City’s annual reporting obligations to demonstrate the proper use
of the funds for approved opioid abatement activities, but the extent of these reporting
obligations is not expected to be unduly burdensome.
BACKGROUND:
After years of negotiations by the Attorney Generals from many states, including
California, a number of proposed nationwide settlement agreements have been
proposed. The agreements that have been proposed would resolve much of the opioid
litigation brought by states and local political subdivisions against large pharmaceutical
manufacturers, distributors, and retail pharmacy chains.
In December, 2021, the City Council approved Tustin’s participation in two such
settlements with distributors McKesson, Cardinal Health and Amerisource Bergen and
the manufacturer Janssen Pharmaceuticals, Inc. and its parent company Johnson &
Johnson (collectively the “2021 Settlements”). Those 2021 Settlement agreements
required the defendants to pay a combined total of up to $26 billion over 18 years to
participating states and subdivisions to remediate and abate the impacts of the opioid
crisis. Of those settlement amounts, about $2.2 billion was slated to be distributed in
California.
Since the 2021 Settlements, California Attorney General Bonta announced several more
proposed multi-state settlements with opioid manufacturers Teva and Allergan for up to
$6.6 billion and chain pharmacies CVS, Walgreens, and Walmart for up to $13.8 billion.
California could receive up to $1.8 billion in opioid abatement funding from these
settlements. Under the proposed settlements, the majority of abatement funds (85%)
would go directly to cities and counties, and any remaining funds would go back to the
defendant manufacturers and pharmacies.
However, like the 2021 Settlements, the degree of local government sign-on to the
agreements determines the amount of the funds that would be dedicated to local
communities. Also like the 2021 Settlements, cities like Tustin may elect to receive direct
payment of settlement funds, or have their allocated share go to the County. If the City
does not affirmatively opt in to become a “Participating Subdivision”, then any local
allocation for the City would be paid to the State of California.
By agreeing to participate in the Settlements, the City would also be agreeing to a
Proposed California State Subdivision Agreement for the Settlements. The Proposed
California State Subdivision Agreements establish how funds from the Settlements may
be distributed, allocated, and spent in California.
DocuSign Envelope ID: A406FE8E-3827-4D8E-AFBA-C894933ADBE2
Resolution to Join Additional National Opioid Settlements
April 12, 2023
PERMISSIBLE USES OF THE FUNDS
Each of the Settlement Agreements require funds to be used primarily for opioid
abatement, but that term is defined by reference to a broad range of specific uses in each
agreement. The lists of pre-approved uses includes a range of education, intervention,
treatment, and recovery services. For instance, a few of the many opioid abatement uses
to which the City could properly apply the funds includes, but is not limited to:
• To expand training for first responders, schools, community support groups and
families in the use of Naloxone or other FDA-approved drugs to reverse opioid
overdoses;
• To increase distribution of Naloxone or other FDA-approved drugs to reverse
opioid overdoses to individuals who are uninsured or whose insurance does not
cover the needed service;
• To educate law enforcement or other first responders regarding appropriate
practices and precautions when dealing with fentanyl or other drugs;
• To provide wellness and support services for first responders and others who
experience secondary trauma associated with opioid-related emergency events;
• To fund and train first responders to participate in pre-arrest diversion programs,
post-overdose response teams, or similar strategies that connect at-risk
individuals to behavioral health services and supports;
• To expand Screening, Brief Intervention, and Referral to Treatment (“SBIRT”)
services to non-Medicaid eligible or uninsured pregnant women;
• To provide comprehensive wrap-around services to individuals with Opioid Use
Disorder (“OUD”), including housing, transportation, job placement/training, and
childcare;
• To fund media campaigns to prevent opioid use (similar to the FDA’s “Real Cost”
campaign to prevent youth from misusing tobacco); or
• To fund evidence-based prevention programs in schools.
In addition to the restricted uses listed above, if the City elects to participate, at least 50%
of the funds received by the City from the Abatement Accounts Fund in each calendar
year must be used for one or more of the following “High Impact Abatement Activities”:
(1) the provision of matching funds or operating costs for substance use disorder
facilities within the Behavioral Health Continuum Infrastructure Program;
(2) creating new or expanded Substance Use Disorder (“SUD”) treatment
infrastructure;
DocuSign Envelope ID: A406FE8E-3827-4D8E-AFBA-C894933ADBE2
Resolution to Join Additional National Opioid Settlements
April 12, 2023
(3) addressing the needs of communities of color and vulnerable populations
(including sheltered and unsheltered homeless populations) that are
disproportionately impacted by SUD;
(4) diversion of people with SUD from the justice system into treatment, including
by providing training and resources to first and early responders (sworn and non-
sworn) and implementing best practices for outreach, diversion and deflection,
employability, restorative justice, and harm reduction; and/or
(5) interventions to prevent drug addiction in vulnerable youth.
For the full lists of specific limitations and allowed uses for the Settlement funds, see
Section 4.B.ii of the Proposed California State Subdivision Agreements, Section VIII of
and Exhibit E to the Teva and Allergan Settlement Agreements, and Section V and Exhibit
E to the Walgreens, Walmart and CVS Settlement Agreements.
The full text of, and Exhibits to, each Settlement Agreement can be found online at the
following links:
Proposed Teva Settlement Agreement:
https://oag.ca.gov/system/files/media/teva-settlement-agreement.pdf
Proposed Allergan Settlement Agreement:
https://oag.ca.gov/system/files/media/allergan-settlement-agreement.pdf
Proposed Walmart Settlement Agreement:
https://oag.ca.gov/system/files/media/walmart-settlement-agreement.pdf
Proposed Walgreens Settlement Agreement:
https://oag.ca.gov/system/files/media/walgreens-settlement-agreement.pdf
Proposed CVS Settlement Agreement:
https://oag.ca.gov/system/files/media/cvs-settlement-agreement.pdf and
https://oag.ca.gov/system/files/media/ca-modifications-cvs-settlement.pdf
In addition, the full text and exhibits for the Proposed California State Subdivision
Agreements can be found online at the following links:
Proposed California State Subdivision Agreement Regarding Teva Settlement:
https://oag.ca.gov/system/files/media/final-teva-allocation-agreement.pdf
DocuSign Envelope ID: A406FE8E-3827-4D8E-AFBA-C894933ADBE2
Resolution to Join Additional National Opioid Settlements
April 12, 2023
Proposed California State Subdivision Agreement Regarding Allergan Settlement:
https://oag.ca.gov/system/files/media/final-allergan-allocation-agreement.pdf
Proposed California State Subdivision Agreement Regarding Walmart Settlement:
https://oag.ca.gov/system/files/media/final-walmart-allocation-agreement.pdf
Proposed California State Subdivision Agreement Regarding Walgreens
Settlement:
https://oag.ca.gov/system/files/media/final-walgreens-allocation-
agreement.pdf
Proposed California State Subdivision Agreement Regarding CVS Settlement:
https://oag.ca.gov/system/files/media/cvs-allocation-agreement.pdf
The California Attorney General provides more information and copies of the agreements
at the following website: https://oag.ca.gov/opioids. A copy of the Attorney General’s
FAQ's about the proposed settlements is also attached for additional information.
ATTACHMENTS:
1. Resolution 23-15 Approving Participation in National Settlements With
Manufacturers Teva and Allergan and Chain Pharmacies CVS, Walgreens, and
Walmart, Regarding Opioids, and the Proposed California State Subdivision
Agreement Corresponding to Each Settlement Agreement, and Authorizing The
City Manager To Execute All Related Documents.
2. California Attorney General’s Frequently Asked Questions re National Opioids
Settlements
DocuSign Envelope ID: A406FE8E-3827-4D8E-AFBA-C894933ADBE2
RESOLUTION NO. 23-15
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA, APPROVING PARTICIPATION IN
NATIONAL SETTLEMENTS WITH MANUFACTURERS
TEVA AND ALLERGAN AND CHAIN PHARMACIES CVS,
WALGREENS, AND WALMART, REGARDING OPIOIDS,
AND THE PROPOSED CALIFORNIA STATE SUBDIVISION
AGREEMENT CORRESPONDING TO EACH SETTLEMENT
AGREEMENT, AND AUTHORIZING THE CITY MANAGER
TO EXECUTE ALL RELATED DOCUMENTS.
WHEREAS, proposed settlement agreements have been reached in litigation brought by
states and cities against opioid manufacturers Teva and Allergan for up to $6.6 billion and
chain pharmacies CVS, Walgreens, and Walmart for up to $13.8 billion (the
“Defendants”); and
WHEREAS, the proposed settlements consist of five agreements with the Defendants
(the “Settlement Agreements”) and five Proposed California State Subdivision
Agreements (the “Subdivision Agreements”) each one corresponding to one of the five
Settlement Agreements.
WHEREAS, under the terms of the Settlement Agreements, California and its local public
agencies could receive up to $1.8 billion in opioid abatement funding from these
settlements with the Defendants; and
WHEREAS, under the terms of Settlement Agreements, Teva and Allergan would pay the
various settling states and local agencies up to $6.6 billion in opioid abatement funding,
and the chain pharmacies CVS, Walgreens, and Walmart would pay up to $13.8 billion in
opioid abatement funding. California is scheduled to receive approximately $2.2 billion,
some of which will be distributed to California cities and counties; and
WHEREAS, although the City is not a litigating entity involved in this litigation, the City
may opt-in and receive funds from the Settlement Agreements in exchange for releasing
its claims against the Defendants and agreeing to the Subdivision Agreements; and
WHEREAS, opting-in to the settlement will enable to the City receive funds from the
Settlement Agreements, which can be used to treat opioid use disorder and for other
specified purposes related to opioid abatement costs, as defined; and
WHEREAS, the City wishes to agree to the terms of the proposed Settlement Agreements
in order to receive monetary payments to fund opioid abatement costs, as defined; and
WHEREAS, jurisdictions must opt-in to become Participating Agencies in the Settlement
Agreements by April 18, 2023.
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NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUSTIN HEREBY
RESOLVES AND ORDERS AS FOLLOWS:
SECTION 1. Participation in the National Opioid Settlement Agreements. The City
Council hereby approves and elects to “opt in” as a Participating Agency in the Settlement
Agreements with manufacturers Teva and Allergan and chain pharmacies CVS,
Walgreens, and Walmart;
SECTION 2. Agreement to Proposed California State Subdivision Agreements. The City
Council approves each of the Proposed California State Subdivision Agreements
corresponding to each Settlement Agreement;
SECTION 3. City Manager Appointment and Authority. The City Manager is hereby
appointed as the City’s Authorized Representative and the City Manager is authorized to
take all necessary and reasonable actions to effectuate the City’s participation in the
Settlement Agreements and the Proposed California State Subdivision Agreements;
SECTION 4: Additional Documentation. The City Manager is further authorized to sign all
additional agreements and documents necessary to implement the City Council’s
direction, each in a form approved by the City Attorney.
PASSED, APPROVED AND ADOPTED this 12th day of April, 2023.
____________________________
AUSTIN LUMBARD,
Mayor
ATTEST:
______________________
ERICA N. YASUDA,
City Clerk
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STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Erica N. Yasuda, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council is five;
that the above and foregoing Resolution No. 23-15 was duly and regularly passed and
adopted at a regular meeting of the City Council held on the 12th day of April, 2023 by the
following vote:
COUNCILPERSONS AYES:
COUNCILPERSONS NOES:
COUNCILPERSONS ABSTAINED:
COUNCILPERSONS ABSENT:
COUNCILPERSONS RECUSED:
ERICA N. YASUDA,
City Clerk
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From the California Attorney General’s Website at
https://oag.ca.gov/opioids/faqs
FAQs about the National Settlements – Information for California
Cities and Counties
1. We received an email about five opioid Settlements. Is it real?
o The email(s) you received relates to five proposed Settlements resolving
claims against manufacturers Teva and Allergan and pharmacies
Walgreens, Walmart and CVS for their roles in the opioid epidemic. The
emails were sent in January and February 2023.
California and its cities and counties stand to receive up to $1.8 billion for
substance use prevention, harm reduction, treatment, and recovery. This is
in addition to the up to $2.2 billion California is expected to receive from
the Distributors and J&J settlements. Payment timeframes vary by
settlement and can last up to 15 years. The more cities and counties that
join, the more the defendants will pay California and our participating cities
and counties.
2. How can my city or county join the Settlements?
o Cities and counties should have received an email in January 2023
describing the settlements. A second email with the sign-on forms and
instructions on how to submit those forms is expected to be sent late-
February. If you did not receive an email in January and believe your city
or county is eligible to participate, please email us at OpioidSettlement-
LocalGovernment@doj.ca.gov.
If your city or county decides to join the Settlements, it may submit the
participation forms electronically via DocuSign. Your city or county may
also elect to sign paper copies and submit them electronically via email or
through the online portal.
By agreeing to participate in the Settlements, your city or county is also
agreeing to the Proposed California State Subdivision Agreement for the
Settlement(s) your city or county joins. The Proposed California State
Subdivision Agreements provide the framework for how funds from the
Settlements may be distributed, allocated, and spent in California.
Participation in all five Settlements will require ten signatures total:
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1. signature agreeing to participate in the Teva Settlement;
2. signature agreeing to the Proposed California State Subdivision
Agreement – Teva Settlement;
3. signature agreeing to participate in the Allergan Settlement;
4. signature agreeing to the Proposed California State Subdivision
Agreement – Allergan Settlement;
5. signature agreeing to participate in the Walgreens Settlement;
6. signature agreeing to the Proposed California State Subdivision
Agreement – Walgreens Settlement;
7. signature agreeing to participate in the Walmart Settlement;
8. signature agreeing to the Proposed California State Subdivision
Agreement – Walmart Settlement.
9. signature agreeing to participate in the CVS Settlement as modified by
the incentive changes described in the CVS Letter Agreement; and
10. signature agreeing to the Proposed California State Subdivision
Agreement – CVS Settlement.
3. Is there a deadline for joining the Settlements?
o Yes. Cities and counties that wish to become initial participating
subdivisions must sign and submit the participation forms and Proposed
California State Subdivision Agreements by April 18, 2023. Cities and
counties that anticipate joining but will not be able to submit the required
forms by April 18, 2023, should notify the AG’s office by sending an email
to OpioidSettlement-LocalGovernment@doj.ca.gov as soon as possible.
4. Has the State joined the proposed Settlements?
o Yes. California Attorney General Rob Bonta, together with the vast majority
of state Attorneys General across the country, signed on to the
Settlements in December 2022. Those AGs as well as the lawyers
representing thousands of cities and counties in the national opioid
litigation strongly encourage signing-on to the Settlements.
Cities and counties that join will help bring as much as $1.8 billion to
California, which will help communities and families with resources for
substance use prevention, harm reduction, treatment, and recovery. This is
in addition to the up to $2.2 billion that California expects to receive
through the Distributors and J&J settlements which were finalized in 2022.
5. Does my city or county need to join all of the Settlements?
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o Yes and no. A city or county that chooses to participate in the Teva or
Allergan settlements, must participate in both. A city or county may choose
to participate in any or all of the Pharmacy settlements. As noted above,
the more cities and counties that join, the more the settling defendants will
pay California and our participating cities and counties under the
Settlements. 85% of abatement funds goes directly to cities and counties.
6. Are all California cities and counties eligible to receive funds from the
Settlements?
o Cities and counties with a population greater than 10,000, based on the
U.S. Census Bureau’s population estimates for July 1, 2019 (released May
2020), are eligible to receive funds. Certain litigating cities and counties
with a population less than 10,000 are also eligible to receive funds.
7. If my city or county joins, how much will it receive?
o California expects to receive up to 9.92% of the national settlement funds.
The amount California ultimately receives will depend on how many
eligible states and eligible cities and counties join the Settlements. The
amounts that California may receive will be divided into three funds: 1)
State fund 15%; 2) CA Subdivision Fund 15%; and 3) CA Abatement
Accounts Fund 70%. Subdivisions that join can expect to receive their
abatement percentage share of the CA Abatement Accounts Fund as
provided in Appendix 1 to the applicable California State Subdivision
Agreement.
California may receive up to $1.8 billion from these five proposed
settlements. This is in addition to the up to $2.2 billion that California
expects to receive through the Distributors and J&J settlements which
were finalized in 2022.
8. How were the above percentages set?
o The allocation model in Appendix 1 that sets forth the distribution of funds
is based on nationally available federal data on opioid use disorder,
overdose deaths, and opioid shipments into California, and was developed
by lawyers and experts in the national opioid litigation.
9. If my city or county joins, will it receive direct payment?
o If a city joins, and it is located in a county that decides to participate in the
Settlement, your allocated amount will be paid to the county unless you
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choose direct payment. You may find your city’s abatement percentage in
Appendix 1 to the Proposed California State Subdivision Agreements. You
may decide to opt in or out of direct payment at any time, and may also
choose to receive only a portion of your share directly. Instructions for how
to elect direct payment will be provided at a later date.
A county that joins a Settlement will receive direct payment, unless it
chooses to direct funds to another eligible city or county.
10. If my city does not elect direct payment, is it still obligated to report on
the use of those funds?
o Section 5 of the Proposed California State Subdivision Agreements lays
out certain annual reporting requirements for cities and counties that
receive direct payment of funds. There are additional reporting
requirements under each of the Settlement Agreements. If your city or
county chooses not to receive direct payment of funds under the
Settlements, it will not be subject to those reporting requirements.
11. If my city or county does not join, what happens to my allocated share?
o If a city or county does not join, the total settlement amount California may
receive may be reduced since that amount is dependent upon
participation by cities and counties. In addition, if a city or county does not
join, its share of the CA Abatement Accounts Fund will go to the State.
12. If my city or county receives direct payments from the Settlements, is it
required to spend the monies for particular uses?
o Yes. The Settlements require funds to be used primarily for opioid
abatement. Please see Section 4.B.ii of the Proposed California State
Subdivision Agreements, Section VIII of and Exhibit E to the Teva and
Allergan Settlement Agreements, and Section V and Exhibit E to the
Walgreens, Walmart and CVS Settlement Agreements for specific
limitations on the use of Settlement funds.
13. What about attorney’s fees for cities and counties?
o The Settlements establish a $2 billion Attorney Fee Fund for attorneys
representing cities and counties that join the Settlements. These
attorneys’ fees include amounts for outside counsel representing
participating subdivisions as well as participating states. The Settlements
require outside attorneys who recover from those funds to waive
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enforcement of their contingency fee entitlements as to all of their clients
and notify their clients accordingly. Subdivisions may also enter into back-
stop agreements to pay their contingency-fee attorneys from any monies
they receive from the CA Subdivision Fund, as provided in Section 5 of
the Proposed California State-Subdivision Agreements and Exhibit R to
each of the Settlement Agreements.
14. Why are the California State-Subdivision Agreements “proposed”?
o Cities and counties will accept the Proposed California State-Subdivision
Agreements through the sign-on process. Exhibit O to each of the
Settlement Agreements lays out certain requirements that must be met
before state-subdivision agreements may be approved. Once those
thresholds are met and the judgments attaching the agreements are
entered, the California State-Subdivision Agreements will become final.
15. Where can I get more information about the Settlements?
o Cities/counties should first consult with their respective city
attorney/county counsel. Cities and counties that retained attorneys to file
opioid litigation should consult those attorneys.
Cities and counties may also contact the Attorney General’s opioids team
via email at OpioidSettlement-LocalGovernment@doj.ca.gov.
Additional settlement-related information is available
at https://nationalopioidsettlement.com/.
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