Opioid Litigation and Opioid Settlement Funds

You’ve likely heard about lawsuits against opioid companies in the news. But what do these legal actions actually mean? How does the process work? And how are funds actually being used? We’ve broken it down here.

The Basics of the Opioid Litigation

There are many reasons why the opioid crisis has become just that – a crisis. A major factor is that many companies made, sold, and distributed prescription opioids in harmful ways. A variety of groups harmed by the opioid crisis sued several of these companies for their role in fueling the crisis.

Those suing (AKA the plaintiffs) include:

• State governments
• Local governments
• School districts
• Tribes
• Individuals who experienced opioid addiction or who lost family members due to opioid overdose

Those being sued (AKA the defendants) include:

• Manufacturers (companies that make opioids): ex. Purdue, Johnson & Johnson, Teva, Allergan, Endo, Mallinckrodt
• Distributors (companies that sell opioids): ex. McKesson, Cardinal Health, AmerisourceBergen/Cencora
• Pharmacies (CVS, Walgreens, Walmart, Rite Aid, Kroger)
• Others that helped these companies, such as consulting and PR companies (McKinsey, Publicis)

Many of the lawsuits were combined into multi-district litigation (MDL), which means that local governments pursued a single settlement together. The MDL encompasses more than 3,000 local governments. Some state/local governments have also pursued their own lawsuits outside of the combined cases.

Those suing make a variety of claims in their lawsuits.

For example, some allege that the manufacturers used deceptive, or misleading, business practices to sell opioids, including false advertising, misbranding, and/or deceptive marketing that falsely downplayed the risk of addiction from opioids.

Some cases allege that distributors and pharmacies didn’t properly monitor suspicious opioid orders, allowing large numbers of pills to flood communities.

For a basic overview of the opioid litigation, see: [BDTN video]

So far, at least 10 major settlement agreements have been reached with at least 16 companies and a variety of different plaintiffs. Some states have opted out of the national settlements and brought their own cases against the companies, with some reaching their own separate settlements.

Over $50 billion in settlement funds is expected to go to state and local governments over 18 years. This includes $26 million from a national settlement (46 states and their participating local governments) with the distributors (McKesson, Cardinal Health, AmerisourceBergen/Cencora) and manufacturer Johnson & Johnson.

Some lawsuits remain ongoing, so there could still be additional funds coming.

Purdue is widely recognized as one of the main companies responsible for fueling the opioid crisis. However, the lawsuits against Purdue have not been settled yet.

Purdue and members of the Sackler family, who own Purdue, have faced thousands of lawsuits nationwide over the past many years. The company filed for bankruptcy in 2019. After years of negotiations, a settlement was reached to dissolve Purdue, pay $6 billion dollars to states, localities, and victims’ families to end the lawsuits, and protect the Sacklers from future lawsuits.

In June 2024, the Supreme Court struck down that agreement, ruling that members of the Sackler family cannot be protected from future lawsuits because they themselves did not file for bankruptcy, only Purdue did. This sent Purdue, the Sacklers, and those that sued them back to the drawing board to create a new agreement.

In January 2025, a new agreement was reached. It would total $7.4 billion. Purdue would pay $897 million immediately. Like the previous agreement, members of the Sackler family would give up ownership of Purdue. They would pay up to $6.5 billion over 15 years, up from $6 billion over 18 years under the original agreement. Between $800 million and $850 million would go to victims of the opioid crisis or their survivors, up from up to $750 million in the previous agreement.

The Sacklers would not receive total immunity from future opioid lawsuits. Instead, the new agreement protects the Sacklers from lawsuits only from groups that agree to the settlement and requires those groups to set aside as much as $800 million for the Sacklers’ defense against future cases.

The new agreement is awaiting approval from the claimants (AKA states, local governments, victims, tribes), as well as the federal government and a federal bankruptcy judge.

For a summary of the recent Purdue agreement, see: [BDTN video]

Each state decides how to give out the settlement funds it receives. Examples include states that have allocated 50% of the funds to the state and 50% to the counties; 15% to the state and 85% to specified regions; separate percentages to the state and to separate abatement funds; or a percentage of the funds exclusively for sheriffs.

Overall, of the $26 billion settlement that was made with the distributors and Johnson & Johnson, 50% of the funds went to states, 38% went to counties, and 12% went to cities, though the allocation within each state varies.

For more information on how each state is allocating funds, see Vital Strategies’ Opioid Settlement Funds: State-Level Guides for Community Advocates

According to the settlement agreements, 85% of funds must be spent on opioid remediation, or addressing the harms that opioids have caused (vs. administration or other uses). 70% must be used for future remediation, as opposed to paying for past expenses.

Exhibit E of the national settlements contains a non-exhaustive list of ways the funds can be used.

Core Strategies for the use of funds include:

• Naloxone or other FDA-approved drugs to reverse opioid overdoses
• Medications for addiction treatment and other opioid treatment
• Services for pregnant and postpartum women
• Treatment for neonatal abstinence syndrome (a condition that can occur when a baby has pre-natal exposure to opioids
• Warm hand-off programs and recovery services
• Treatment for the incarcerated population
• Prevention programs
• Syringe service programs
• Evidence-based data collection and research analyzing the effectiveness of the remediation strategies within the state

Other Approved Uses include:

• Treatment: Strategies to treat opioid use disorder, support people in treatment and recovery, connect people who need help to care, address the needs of criminal justice-involved persons, and address the needs of pregnant and parenting women and their families.
• Prevention: Strategies to prevent overprescribing and ensure appropriate prescribing and dispensing of opioids, prevent misuse of opioids, and prevent overdose deaths and other harms (harm reduction).
• Other: Strategies to support first responders; leadership, planning, and coordination; training; and research.

Each state/locality can choose which areas and specific uses to fund.

Importantly, Exhibit E serves as a guardrail to prevent against misuse of the funds for purposes other than addressing the opioid crisis. This aims to avoid repeating the mistakes from the Tobacco Master Settlement Agreement of the 1990s. That settlement did not order how the funds could legally be used, and while they were supposed to be used for preventing and treating tobacco use, many states ended up using funds for unrelated and/or purposes that were counterproductive to ending tobacco use (e.g., filling budget gaps, fixing potholes, supporting tobacco farmers).

However, there is a lot of room for interpretation in how the opioid settlement funds can and should be used, with states/localities coming to different conclusions about what counts as an “allowable use” of the funds.

How states actually determine what the funds are used for also varies widely. Some have created councils that develop recommendations for how to spend the funds for the state’s legislature and/or governor. Others have created special funds/accounts for the funds, to be distributed by the health department. Some state legislatures are responsible for distributing the funds, while other states put their attorney general in charge of distributing the funds through grants. Local governments also have their own processes for distributing the funds, which are separate from the state’s process.

For more on how states are distributing their funds, see National Academy for State Health Policy’s State Opioid Settlement Spending Decisions.

Other related resources:

• How To Invest Opioid Settlement And Federal Funding To Prevent Substance Use And Promote Youth Mental Health
• Allocate opioid settlement dollars to real addiction-ending solutions; Will opioid settlement money actually go to opioid prevention? Here’s hoping
• Congressional Addiction, Treatment, and Recovery Caucus Briefing
• Determining Best Strategies for Allocating the Pharmaceutical Settlement Dollars to Abate the Opioid Crisis

There is a lot we don’t know about how the funds are being spent, both due to a lack of transparency from states and because many states are only just starting their reporting processes.

Most of the settlement agreements only require governments to report on the 15% of the funding that can be used for things unrelated to the opioid crisis. Few governments have actually submitted these reports, and they lack detail. As of January 2024, only 18 states committed to report 100% of their opioid settlement spending to the public. 12 states had yet to commit publicly reporting any spending, and 20 states and DC had committed to public reporting only a portion.

So far, the largest percentage of the funding has gone toward treatment, followed by harm reduction and recovery services.

However, there are concerning examples of funding going toward law enforcement (e.g., jail technology/scanners, vehicles, surveillance cameras, etc.) and products advertised heavily to officials that may not be the most effective use of funds (e.g., bola wraps for law enforcement, which are devices that shoot a Kevlar tether through the air until it wraps around a person with the aim of helping law enforcement detain people without the use of force, Deterra drug disposal pouches that deactivate unwanted pills so they cannot be misused even if fished out of the trash, etc.). There is also a lack of funding going towards effective prevention.

Funds should go toward uses that do not have other existing sources of funding. However, only 13 states and DC have restricted the practice of substituting opioid settlement funds for existing dollars (i.e., supplantation). For example, counties have used opioid settlement funds to pay the salaries for a health director and emergency medical services staff, for a drug court that has been operating with other sources of funding for more than 20 years, or for a crisis stabilization center that would have been supported through federal funds. The risk for supplantation is increasing as states lose federal funding.

Helpful resources for tracking opioid spending include:

• Opioidsettlementtracker.com
• KFF Health News’s series Payback: Tracking the Opioid Settlement Cash