Proposed federal law would put limits on use of $50 billion in opioid settlements

Some members of Congress are demanding federal oversight of billions of dollars in opioid settlements, which state and local governments began spending over the past two years — with some using it to plug budget holes rather than fight the addiction crisis.

This month, Rep. Marcy Kaptur, D-Ohio, and Rep. Ashley Hinson, R-Iowa, introduced legislation that would write into law approved uses for the funds so they reach people most affected by the crisis.

With more than 100,000 Americans dying annually of overdoses in recent years, "any effort we can make to try to turn the needle toward treatment, prevention, education, and enforcement is critical," Kaptur said in an interview. "This bill aims to ensure that these funds are used for those purposes and not as a piggy bank for other projects."

It's the third time since 2019 that Kaptur has proposed similar legislation, but she considers it more important now because settlement money has begun to flow and examples of questionable uses have surfaced. She cited KFF Health News' reporting in Greene County, Tennessee, as an example.

But in the current Congress —one of most unproductive on record, which now faces an election-year calendar full of big-ticket items from the federal budget to border security — the bill's path forward is difficult at best.

The opioid cash comes from more than a dozen drugmakers, pharmaceutical distributors, and retail pharmacies that have agreed to pay more than $50 billion over 18 years in legal settlements intended to resolve their roles in the opioid addiction crisis. The companies — including CVS, Johnson & Johnson, AmerisourceBergen and Cardinal Health — were accused of downplaying the risks of prescription opioids and fueling the first wave of the crisis.

Most settlements specify that states must spend at least 85% of the payouts to address the epidemic. The agreements include a list of more than 100 suggested investments, many of which echo the approved uses in Kaptur and Hinson's bill.

But, as KFF Health News has been reporting for more than a year, a lack of transparency and enforcement has made it difficult to determine if states are meeting that 85% threshold. In at least two instances, counties used settlement funds to pay back old debt or shore up their budget. Other jurisdictions have made controversial purchases, including a lasso-like tool for police officers and body scanners for jails.

Enforcement of the settlement standards is left to the companies that paid out the money. They've taken no action to date.

Now, people harmed by the crisis, advocates, and public health and policy experts are hopeful that increasing congressional attention could push state and local governments to spend the money on treatment, housing, and other services for addiction victims and their families. But they're wary of the bill Kaptur and Hinson have proposed, saying it lacks teeth and may be a hollow promise of oversight.

"There's not any actual power in the bill," said Jordan Scott, an organizer with the Pennsylvania Harm Reduction Network who has personal experience using drugs.

The four-page bill lists how states should spend settlement money but doesn't specify consequences for flouting the rules. Nor does it name an entity in charge of monitoring compliance.

"If the bill gets passed, it's really performative at best," Scott said.

A push to invest in treatment and prevention

Kaptur and Hinson's bill, the Opioid Settlement Accountability Act, has two parts: The first bars the federal government, beginning in 2026, from using a little-known provision of Medicaid to take a portion of states' opioid settlement funds. That condition would ensure the dollars remain under local control.

But it's a trade-off: The second part of the legislation requires states to stick to acceptable uses of the money, such as investing in treatment, prevention, equipment for law enforcement and first responders, and housing or employment training for people in recovery.

The idea of such a trade-off comes from the 1990s tobacco settlement, when companies resolved lawsuits over the harms of cigarettes by agreeing to pay states billions annually for as long as they continued selling the product. Those suits aimed, in part, to recover health care costs for smoking-related illnesses.

Medicaid, a public insurance program for people with low incomes or disabilities, was a leading payer of those costs. Since Medicaid is funded jointly by the U.S. and state governments, federal authorities had a right to some of the settlement money.

Back then, states lobbied Congress to forgo that claim. Anti-smoking advocates asked legislators to do so only if they required states to spend at least 25% of the funds to curb tobacco use. But Congress waived its right to the money unconditionally.

"And we've all paid the consequences," said Matthew Myers, former president of the nonprofit Campaign for Tobacco-Free Kids.

The group has released annual reports for more than a decade, which show states generally spend less than 5% of the tobacco money they receive on smoking prevention and cessation programs.

Lawmakers have "an opportunity to learn from the mistakes of the tobacco settlement," Myers said. Imposing conditions before they release claims to the opioid settlement funds "is the federal government's one opportunity to ensure the money actually addresses the national crisis."

Accountability without transparency?

One big question looming over the opioid settlement bill is exactly how Congress would monitor states' compliance with its allowed uses for settlement money, given there are almost no national requirements for jurisdictions to report how they spend it.

Although some states have enacted stricter standards on their own, most offer little to no transparency on where these dollars flow. The bill wouldn't change that.

"What disappoints me is that it's called the 'Accountability Act,' but nothing in there is about transparency," said Dennis Cauchon, president of the nonprofit Harm Reduction Ohio. "Transparency is the most important lever."

"If people can see how the money is spent, then you can influence it," added Cauchon, who sued the group controlling the bulk of settlement dollars in his state for violating public records and open-meeting laws.

The Biden administration has been quiet on oversight of settlement funds, despite hopes it would step in.

Last fall a dozen legislators signed a letter urging the Office of National Drug Control Policy to provide more oversight. The office responded that "currently, no mechanism exists that would allow ONDCP to require states to disclose their spending" and that the "ONDCP cannot effectively monitor how states use these funds."

This history feeds skepticism that the Opioid Settlement Accountability Act will have more success.

But Regina LaBelle, a former acting director of national drug control policy under President Joe Biden who now works for Georgetown University's O'Neill Institute, said even if the legislation doesn't pass, it could prove useful by putting local officials in charge of settlement funds on notice that they're under scrutiny.

"It's important that states know people are paying attention to this money," she said.

KFF Health News, formerly known as Kaiser Health News (KHN), is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling, and journalism.

Copyright 2024 KFF Health News. To see more, visit KFF Health News.

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