Dealing in Settlements: Arizona’s Efforts to Combat the Opioid Epidemic

By Alexandra Van der Gaag. 

National Opioid Lawsuits and Settlements

Since 2014, attorneys general across the nation have been filing lawsuits against drug manufacturers, distributors, pharmacies, and other associated parties in an attempt to combat the opioid epidemic and recover related costs. In these suits, plaintiffs claim that “drug manufacturers and distributors improperly marketed and distributed opioids to states, cities, and towns across the United States” while failing to properly caution the public about the associated risks. This improper marketing and distribution led to the deaths of hundreds of thousands of US citizens.

In July 2021, attorneys general in 14 states reached a settlement agreement with Johnson & Johnson, AmerisourceBergen, Cardinal Health, and McKesson, in which the manufacturer and distributors would pay the government $26 billion and comply with certain injunctive remedies. Pursuant to the settlement agreement, Amerisource, Cardinal, and McKesson are collectively required to pay up to $21 billion over 18 years (with Amerisource paying $6.1 billion, Cardinal paying $6 billion, and McKesson paying $7.4 billion), while Johnson & Johnson has agreed to pay up to $5 billion spread out over nine years, with up to $3.7 billion paid during the first three years. Cardinal, McKesson, and AmerisourceBergen must also comport with certain injunctive remedies, including reporting and prohibiting the shipment of suspicious opioid orders, terminating certain pharmacies’ ability to receive shipments, and reporting those companies to state regulators. Further, they will track aggregated data regarding the destination and frequency of opioid shipments to pharmacies in an effort to more closely monitor and track the distribution of opioids across America. This aggregated data will be provided to both state regulators and the three main drug distributors. 

Opioid Abuse in Arizona

Deaths caused by opioid overdoses have doubled since 2010 and quadrupled since 1999. At present, Arizona has the 12th highest prescription drug overdose mortality rate in the United States. In 2017, Governor Doug Ducey declared a Public Health Emergency related to the opioid crisis.

According to the Arizona Department of Health Services, more than five Arizonans die every day from opioid overdoses. In 2023, there were 1,865 confirmed opioid deaths, as well as 4,054 non-fatal opioid overdoses. The vast majority of these events occurred in Maricopa County (2,864 non-fatal events and 1,169 opioid-related deaths), with the next-highest rate in Pima County (591 non-fatal events and 329 deaths). 

Funding Distribution and the “One Arizona Agreement”

Parties in settlement negotiations insisted that the funds paid by the defendants be distributed based on the “overall degree of participation by both litigating and non-litigating states and local governments,” with the majority of the money to go toward opioid treatment and prevention. The amount of funding that each state receives is determined by accounting for the impact of the opioid epidemic on the specific state, including the number of overdosing deaths, number of residents in that state with substance use disorder, the quantity of opioids delivered to the state, and the state’s population. 

Initial payments by Johnson & Johnson, Amerisource, Cardinal, and McKesson began in April 2022 and are currently being distributed throughout Arizona. In June 2023, similar national opioid agreements with Teva, Allergan, CVS, and Walgreens were reached, from which Arizona will receive $380 million from these agreements over 15 years. Settlement has also been reached with Walmart, and Arizona also anticipates receiving settlement money from Endo International PLC and Purdue Pharma. In sum, as of June 30, 2023, Arizona anticipates receiving $1,140,794,564.91 from opioid settlements, to be distributed amongst the state and local governments. 

The One Arizona Agreement was created to outline how Arizona will distribute the $1.14 billion received through the opioid settlements over the course of 18 years. According to the Agreement, these funds shall be divided between the state and local governments with the state retaining 44% of the money and 56% going to participating local governments. The settlement funds are distributed to local governments under the condition that they can only be spent on approved “opioid abatement strategies” (AKA “approved purposes”) within the region or on grants to organizations for one of the approved purposes. “Approved purposes” include treating opioid addiction through “evidence-based, evidence-informed, or promising programs or strategies” such as (1) expanding treatment availability, (2) reimbursing for certain services related to treating opioid addiction, or (3) providing detox and withdrawal management services and mental health treatment for opioid users. For an exhaustive list of approved purposes, click here. 

Similarly, the share of the settlement funds remaining with Arizona shall be used either for approved purposes within the state or will go toward grants to organizations that would utilize the funds in accordance with the approved purposes. Up to 30% of the State’s share will be prioritized for education and advertising “related to awareness, addiction, or treatment”; handling opioid use within the Arizona prison system; and detecting and preventing drugs from entering the United States through the southern border. 

In Maricopa County, the Maricopa County Department of Public Health is acting as the lead agency for administering county funds and distributing the payments amongst the municipalities, as dictated in the One Arizona Agreement. As of December 14, 2023, Maricopa County has received $25,751,274 from the state, accounting for 57.93% of the state’s allocation. Of this sum, the County has retained 51.53% and has distributed the remaining 48.47% amongst the municipalities. (Native American tribes are allocated funds directly, rather than through the County, and are therefore not accounted for in these numbers.) Though to date Maricopa County has only received slightly under $26 million, the County anticipates receiving $370,082,883 after all settlements have been distributed. 

At present, of the $13.2 million retained by Maricopa County, only $5.42 million has been distributed thus far. Specifically, $2.5 million has been given to the County’s Correctional Health Services, and $2 million has gone to 12 community-based organizations meant to “expand youth prevention and treatment programs; bolster harm reduction programs; and enhance processes for smoothly transferring a person from one service to another.” Additionally, $750,000 has been allocated to purchasing and distributing naloxone, and $170,000 has gone toward expanding Public Health staff capacity and providing staffing support. 

Within Maricopa County, the city of Phoenix is receiving 21.28% of the State’s total payment, with the next largest allocation going to Mesa at 6.06%. All local government entities receiving settlement funds must submit annual reports related to their spending to the State Attorney General to ensure their compliance. 

In the coming years, especially with growing concerns over the increasing presence of fentanyl in Arizona, it is important for the federal, state, and local governments to take urgent action in combating the opioid epidemic. While the distribution of these funds will do much to develop addiction treatments and improve the mortality rate of opioid abuse, the money will not last forever. Hopefully, these new and improved programs will lead to increased public awareness and concern over this epidemic, which will push lawmakers to enact legislation that will remain long after the funds have been exhausted. 

If you or someone you know is struggling with opioid use or addiction, call or text the Suicide & Crisis Lifeline at 988 for 24/7 emotional and substance abuse support.