Report Prepared by: Kimberly G. Flores, Interim City Attorney
Title
SUBJECT: Adoption of a Resolution Opting to Participate in the National Opioid Settlement(s) and Authorizing the City Manager to Execute the Necessary Settlement Agreements
REPORT IN BRIEF
Adopting a Resolution authorizing the City Manager or designated representative to opt-in and to execute any and all documents necessary to opt-in and participate in the two National Opioid Settlement(s): one with the three major opioid distributors, Cardinal Health Inc., McKesson Corp., and AmerisourceBergen Corporation; and, the second with Janssen Pharmaceuticals, Inc. and its parent company Johnson & Johnson. The documents include, but are not limited to, the Proposed California State Subdivision Agreement Regarding Distribution and Use of Settlement Funds - Distributor Settlement, Proposed California State-Subdivision Agreement Regarding Distribution and Use of Settlement Funds - Janssen Settlement, and related Settlement Participation Forms.
RECOMMENDATION
City Council - Adopt a motion adopting Resolution 2021-111, A Resolution of the City Council of the City of Merced, California, Opting to Participate in the National Opioid Settlement(s) and Authorizing the City Manager to Execute the Necessary Settlement Agreements.
Body
AUTHORITY
Charter of the City of Merced, Section 200
DISCUSSION
Nationwide settlements have been reached to resolve all Opioid litigation brought by states and local political subdivisions against the three largest pharmaceutical distributors: McKesson, Cardinal Health and AmerisourceBergen (“Distributors”), and manufacturer Janssen Pharmaceuticals, Inc. and its parent company Johnson & Johnson (collectively, “J&J”). These settlements will provide substantial funds to states and subdivisions for abatement of the Opioids epidemic across the country and will impose changes in the way the settling defendants conduct their business.
If the proposed settlements are fully adopted by states and subdivisions nationwide, the Distributors will pay a maximum of $21 billion over 18 years, while J&J will pay a maximum of $5 billion over no more than nine years. The settlements will allow for a broad range of approved abatement uses by state and local governments. The list of pre-approved uses includes a wide range of intervention, treatment, education, and recovery services so that state and local governments can decide what will best serve their communities.
California Attorney General Rob Bonta signed on to the Settlements in August 2021. California may receive up to 9.92% of the settlement funds which could amount to as much as $1.8 billion from the Distributors Settlement and $423 million from the Janssen Settlement. The amount California ultimately receives will depend on how many 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%.
California, and counsel representing a group of cities and counties, have reached agreement on a proposed allocation of recoveries that California may receive pursuant to the Distributors and J&J Settlements. These proposed agreements must be formally adopted through the sign-on process. Acceptance of the applicable state subdivision agreement on allocation is a condition of a city or county joining either or both of these settlements. The deadline for eligible cities and counties to join these settlements is January 2, 2022.
California cities and counties that join can expect to receive their abatement percentage share of the California Abatement Accounts Fund as provided in Appendix 1 to the Proposed California State-Subdivision Agreement(s). If the City of Merced opts-in to the settlement(s), it can expect to receive .0500762% of the California Abatement Funds.
IMPACT ON CITY RESOURCES
None.
ATTACHMENTS
1. Resolution 2021-111
2. Proposed California State-Subdivision Agreement Regarding Distribution and Use of Settlement Funds - Distributor Settlement
3. Proposed California State-Subdivision Agreement Regarding Distribution and Use of Settlement Funds - Janssen Settlement
4. Settlement Participation Form - Distributor Settlement
5. Settlement Participation Form - Janssen Settlement