Feb. 17, 2021 – Earlier this month, Wisconsin Attorney General Josh Kaul announced that Wisconsin, along with 47 other states, reached a $573 million settlement with the world’s largest consulting firm, McKinsey & Company, related to the opioid epidemic.

The coalition of U.S. states alleged McKinsey “contributed to the opioid crisis by promoting marketing schemes and consulting services to opioid manufacturers, including OxyContin maker Purdue Pharma, for over a decade.”

The coalition of states also alleged that McKinsey “advised Purdue on how to maximize profits from its opioid products, including targeting high-volume opioid prescribers, using specific messaging to get physicians to prescribe more OxyContin to more patients, and circumventing pharmacy restrictions in order to deliver high-dose prescriptions.”

Wisconsin will receive $10.3 million in the multistate agreement to abate problems cause by opioids. “As this case shows, getting accountability can mean additional resources to help communities mitigate the epidemic,” said Kaul in the announcement. “It can also deter the kind of misconduct that could lead to future epidemics.”

The opioid crisis is decades in the making, and now opioid manufacturers, distributors, pharmacies, prescribers, and consulting firms are facing the litigation music.

“Increased sophistication in the methods and data used to track epidemiological harms over time and across populations has bolstered the evidence base that can be brought to bear in such cases,”¹ wrote Rebecca Haffajee, a lawyer and a professor of health management and policy at the University of Michigan’s School of Public Health.

The opioid litigation, much like the tobacco litigation of the 1990s, will likely result in more million and billion-dollar settlements to be paid to state, local, and tribal governments spanning many years for the purpose of addressing and curbing the opioid epidemic.

But professional and advocacy organizations say state and local governments should learn from tobacco litigation’s history and “avoid what happened with the dollars that states received as part of the litigation against tobacco companies.”²

The Toll of Opioids Continues

Since 1999, more than 450,000 people have died from an opioid-related overdose in the U.S., including prescription, synthetic, and illicit opioids, primarily heroin.³

In the last 20 years, the U.S. has experienced a dramatic annual increase in opioid deaths. U.S. opioid-related deaths increased from under 10,000 in 1999 to almost 50,000 in 2019, the number of annual deaths more than doubling in the last decade.⁴

National overdose deaths involving heroin, an alternative when prescription opioids are not available,⁵ charted a similar increase between 1999 and 2019.⁶ In the last 20 years, more than 9,000 Wisconsinites have died from an opioid overdose.

Synthetic opioids such as Tramadol and Fentanyl, prescribed or illicitly manufactured, account for the most dramatic increase in opioid-related deaths since 2013.⁷

State, local, and tribal governments have turned to legislation and litigation to address and fight the opioid epidemic, while criminal court systems have focused on helping those addicted to opioids find alternatives to incarceration, through treatment courts.

In 2016, Brown County Circuit Court Judge Thomas Walsh, in a feature article for Wisconsin Lawyer, explored “Heroin’s Impact on Wisconsin’s Criminal Justice System.” noting the problem of substance abuse was reaching “alarming proportions.”

Court systems are addressing whether to treat opioid addicted individuals as criminals or victims of the opioid epidemic. In state and federal courts nationwide, litigants are also addressing who must be held accountable for the proliferation of opioids in the U.S.

Opioid Litigation Continues

Before the opioid epidemic was overshadowed by a global pandemic, opioid litigation was heating up with reports of major settlements, most notably a global resolution of the U.S. Justice Department’s criminal and civil investigations into Purdue Pharma LP and individual shareholders from the Sackler family, which owned Purdue Pharma.

Purdue, which has reached numerous million dollar settlements since 2007, agreed to a criminal fine of $3.5 billion and $4.8 billion in civil fines and forfeitures.⁸ The Sackler family separately agreed to pay $225 million to resolve False Claims Act liability.⁹

“In exchange, the federal government agreed not to pursue any other criminal charges against the company for its actions between May 2007 and October 2020” and “no members of the Sackler family were charged or admitted to any criminal wrongdoing.”¹⁰

Purdue Pharma and other pharmaceutical manufacturers, distributors and pharmacies are also facing more than 2,400 lawsuits consolidated in multi-district litigation and all but one state (Nebraska) has filed civil suits in state court against similar parties.¹¹

A Wisconsin lawsuit against Purdue continues in Dane County Circuit Court, where the state alleges the company repeatedly made false and deceptive claims regarding OxyContin, but the lawsuit was delayed as Purdue works through bankruptcy court.

In early 2020, AG Kaul announced that Wisconsin was part of a $1.6 billion global settlement with opioid manufacturer Mallinckrodt, which also filed for bankruptcy. The proceeds will be used for the abatement of the opioid crisis.

Wisconsin is also a plaintiff in a lawsuit, backed by 41 other states, in the U.S. District Court for the Eastern District of Pennsylvania, against Indivior Inc. and others.

The plaintiff states allege defendants “employed an unlawful, multi-pronged scheme designed to prevent or delay less expensive generic versions of Suboxone from entering the market to preserve their monopoly profits from the sale of Suboxone.”

Opioid manufacturers, distributors, and pharmacies are on state and federal dockets nationwide. When the dust settles, billions of settlement dollars will likely flow to government trust funds to abate the opioid epidemic moving forward.

Large settlements already include a $270 million settlement between Purdue and the state of Oklahoma and a $260 million settlement between Cuyahoga and Summit counties in Ohio and three of the world’s largest opioid distributors.¹²

The opioid litigation can serve important health objectives, including “compensation for abating opioid harms, deterrence of corporate malfeasance by holding many companies accountable for their behavior and requiring them to change it, and acute public awareness of the risks of opioid addiction,” according to Prof. Haffajee.¹³

She notes that “uses of settlement funds, particularly in the wake of some misuse of tobacco settlement dollars, has been a point of contention in these and ongoing cases.”

Lessons from Tobacco

The 1998 Master Settlement Agreement, between 46 states and major tobacco companies “requires tobacco companies to make annual payments to the states in perpetuity, with payments estimated at $246 billion over the first 25 years.”¹⁴

The payments are intended, in part, to fund education campaigns to quit smoking and to discourage tobacco use among youth. Those campaigns have been successful at reducing smoking rates, but vaping rates among teens have skyrocketed.

States also collect billions in taxes from tobacco sales. Every year, a coalition that includes the American Lung Association and the American Heart Association publish annual reports on how tobacco settlement funds and tax revenue are used.

A 2018 report concluded that most states are “spending a small fraction of their tobacco revenues to fight tobacco use and the enormous public health problems it causes.”  

In fiscal year 2020, states will collect more than $27 billion from the tobacco settlement and taxes, but spend just 2.7 percent on prevention programs, the report notes.

Now, professional and advocacy organizations are warning state and local governments to avoid the same mistakes with opioid litigation settlements funds.

For instance, more than 30 leading health groups – coordinated by Johns Hopkins Bloomberg School of Public Health – recently released a set of principles “aimed at guiding state and local spending of the forthcoming opioid litigation settlement funds.”

The coalition urges government leaders “to avoid the mistakes of the 1998 tobacco settlement” and use opioid settlement funds “to support efforts based in evidence.”

“We don’t want to see a repeat of what happened with the tobacco litigation settlements where the vast majority of the funds weren’t used to address the actual public health issue at hand,” said Joshua Sharfstein, MD, vice dean for Public Health Practice and Community Engagement at the Johns Hopkins Bloomberg School of Public Health.

Endnotes

¹ Rebecca Haffajee, The Public Health Value of Opioid Litigation, J. Law Med Ethics (June 2020).

² Johns Hopkins Bloomberg School of Public Health, Principles for the Use of Funds from the Opioid Litigation (January 27, 2021).

³ Centers for Disease Control and Prevention (CDC), Understanding the Epidemic (last visited Feb. 12, 2021); National Institutes of Health, Overdose Death Rates (last visited Feb. 12, 2021).

⁴ Id.

⁵ National Institute on Drug Abuse, Prescription Opioid Abuse Can Lead to Heroin Abuse (May 3, 2012).

⁶ CDC, Understanding the Epidemic (last visited Feb. 12, 2021).

⁷ Id.

⁸ Cory S. Davis, The Purdue Pharma Opioid Settlement – Accountability or Just the Cost of Doing Business, the New England Journal of Medicine (Jan. 14, 2021).

⁹ Id.

¹⁰ Id.

¹¹ Congressional Research Service, Overview of the Opioid Litigation and Related Settlements and Settlement Proposals (Nov. 25, 2019); Centers for U.S. Policy, Opioid Litigation Status Update (Jan. 26, 2021).

¹² Haffajee, The Public Health Value of Opioid Litigation, J. Law Med Ethics (June 2020).

¹³ Id.

¹⁴ Johns Hopkins Bloomberg School of Public Health, Principles for the Use of Funds from the Opioid Litigation (January 27, 2021).