Texas AG urges cities, counties to sign onto $26 billion opioid settlement

“This is a good deal for Texas, for its cities and its counties and really all of the citizens of this great state,” said the Republican attorney general at a news conference in Houston. “The cities and counties with trial dates have no guarantees of a trial and they have no guarantees of any money. One thing they are guaranteed is a long, drawn-out process, which doesn’t allow the people who need this to get it.”

The proposed settlement was made with Cardinal, McKesson, and AmerisourceBergen — the nation’s three major pharmaceutical distributors — and Johnson & Johnson, which manufactured and marketed opioids.

The distributors had been accused in hundreds of lawsuits of ignoring the amount of addictive painkillers being sold on the black market and their role in the nationwide epidemic of addiction and overdose deaths. Johnson & Johnson was accused of minimizing the dangers of opioids in its marketing. All three have denied wrongdoing.

Some governments have scoffed at the payout. The Philadelphia district attorney late month sued that state’s attorney general over the deal, saying the city will reap relative pennies compared to the cost of the crisis that is killing more than 1,000 people there per year.

Washington state Attorney General Bob Ferguson said he would reject the deal as “insufficient” and move ahead with a trial on claims against the distributors scheduled to start in September.

Similar attitudes abound in Texas as well. Attorneys representing Bexar County have disagreed over whether to participate in the settlement, with some arguing that the plaintiffs will have better leverage and a chance for even more funds if they continue marching toward trial.

Local governments have until Jan. 2 to decide whether to sign onto the deal, while the states have a few more weeks. As cities and counties have to go through city councils and commissioners courts, the process may take some time. So far, while the AG’s office has heard from some that intend to take the deal, none have officially signed on, said Alejandro Garcia, a spokesman for the office.

At least 44 states — and more than 90 percent of cities, counties and others suing the companies and jurisdictions that have yet to sue — must sign onto the deal to receive a portion of the money, according to sources familiar with the agreement who spoke on the condition of anonymity with the Washington Post. To receive the maximum amount, 48 states would have to join on, a source told Reuters.

“The settlement does not have a specific joinder threshold to move forward,” Garcia said. “However, if we do not have a large number of cities and counties participating, approximately half our money wouldn’t be available. The more that join, the more the amount will increase.”

Most of the state’s estimated $1.5 billion which would go toward treatment, prevention, education and other costs created by the epidemic, as prescribed by a new state law.

Nearly 500,000 people died from overdoses involving opioids — including both prescription drugs and illicit ones, such as the synthetic fentanyl — from 1999 to 2019, according to the Centers for Disease Control and Prevention. The number of deaths reached a record high in 2020 at more than 93,000.

Under the 10-year proposed court order, the companies would be required to create and fund an independent clearinghouse of data showing where shipments of the prescription drugs are going and how often. The defendants are also agreeing to use data-driven systems to identify and stop suspicious opioid orders from customer pharmacies.

J&J would not be able to sell opioids, which it said it already stopped doing in the U.S. last year, lobby on any related matters, or fund grants to third parties for promoting opioids. It also would have to share clinical trial data with the Yale University open data access project.

If approved, the settlement will likely be the largest of many in the opioid litigation playing out nationwide. It’s the second-biggest cash settlement in U.S. history following the $246 billion tobacco agreement in 1998.

The three distributors would pay $21 billion over the next 18 years, while J&J would pay up to $5 billion over nine years.

Paxton’s office had previously estimated that Houston would receive about $7 million and Harris County about $15 million. San Antonio would receive about $4 million and Bexar County about $7 million.

“We feel that the reason that the pharmaceutical companies and the AG have partnered to push Bexar County into this settlement agreement is that they know that if we continue into trial, which is our strategy, Bexar County residents will be able to get more compensation,” Robert Vargas, director of public policy for one of the attorneys, Phipps Mayes, told the Express News in December 2020.

The firm would like to see Bexar County get at least $1 billion and worry that taking Paxton’s deal would jeopardize their shot at justice. County Judge Nelson Wolff has also questioned the sum.

Paxton had previously taken heat from state lawmakers for making decisions about where to direct the funds without involving the Legislature, which makes appropriation decisions on behalf of the state.

Suzanne Jarvis, director of data management and program analytics for the Houston Recovery Center, a substance abuse sobering center that helps connect people arrested for public intoxication with support services, said the funding is sorely needed. The center also works with Houston and Harris County to provide case management and outreach efforts.

“We are so grateful for this money that’s coming in,” Jarvis said from the center where the news conference was held Thursday. “Substance use money comes in with a lot of restrictions, but it seems that this money that’s coming in, we will as a population in Texas be able to define how those funds are distributed.”

The Associated Press contributed to this report.