Asheville – At a recent pre-meeting briefing, Buncombe County Senior Attorney Brandon Freeman and Commissioner Jasmine Beach-Ferrara shared an overview of the administrative network that had been established and continues to evolve for disbursing proceeds from opioid settlements. They highlighted was is expected to be a $26 billion settlement with opioid manufacturer Johnson & Johnson and three drug distribution companies: McKesson, Cardinal Health, and AmerisourceBergen. According to the most recent reports, these companies intend to bankroll the reparations with write-off tax breaks created during the pandemic.
Before the write-offs existed, however, Purdue Pharma had settled for $8 billion, which led to its filing for bankruptcy. The company will now be dissolved and re-established as a public benefit company, with all profits turning over to state and local governments.
Lest anyone thinks the opioid crisis is manufactured to justify the nationalization of an industry, Beach-Ferrara shared some statistics. She said over 16,000 persons had died of opioid overdose in North Carolina from 2010-2019. Then COVID. She didn’t have any numbers but said emergency departments and paramedics in the area see the same surge as the rest of the country, which is attributable to increased isolation and despair.
North Carolina expects to receive $850 million from these two settlements, plus more from ongoing litigation. County Manager Avril Pinder expected Buncombe to receive $13-$14 million. The settlements will be paid over 18 years in tapering annual distributions. The apportionment formula is based on the number of pills dispensed, opioid overdose deaths, and persons suffering opioid use disorder.
Michigan claims credit for first suing opioid industry actors to patch the hole burnt through its budget by overburdened emergency responders, public health administrators, and social service providers. Then, it wasn’t long before enterprising law firms seized the opportunity to turn this into multidistrict litigation (MDL). In November 2017, Buncombe County hired Baron & Budd, along with five other firms, too, as then-County Manager Mandy Stone described it, “make the county whole.” Eventually, over 3,000 local governments jointly sued several companies involved in the manufacture, marketing, and distribution of opioids, including 76 counties and eight municipalities in North Carolina.
In 2020, North Carolina established the 555 Committee, on which Beach-Ferrara serves. The committee is named after the five county attorneys, five county managers, and five county commissioners from across the state that comprises it. The commission is now pushing strategies designed to “maximize North Carolina’s share” of settlement funds.
Since terms of the settlement give states considerable discretion over how they plan to spend the funds, the 555 Committee drafted a memorandum of agreement (MOA). The MOA governs how to distribute any proceeds from opioid settlements between the state and local governments. Freedman proposed spending 5 percent of the state’s proceeds on incentivizing local governments that weren’t involved in the litigation to, “sign into this settlement.” They want to apportion 15 percent to the state to be spent at its discretion and leave the remainder to the litigating local governments per a formula developed by attorneys handling the national case.
Freeman expected Buncombe County to get a substantial amount of settlement funds because it joined the litigation early. The incentives were proposed because national settlement terms award the most to states with all counties signing on; the state, to counties with all municipalities with a population over 30,000 participating. Pinder said the North Carolina Association of County Commissioners had already published template resolutions. The sooner the commissioners and the City of Asheville sign one, the larger their hopes of allocation may be.
Freeman said he was impressed with how much control local governments would have overspent, but also said that was necessary because the crisis unfolds differently in different areas. To govern spending, though, the MOA created two options. The first would allow local governments to select from a shortlist which “evidence-based, high-impact” strategies it would fund. The second allowed selection from a long list, “after engaging in a collaborative strategic planning process involving a diverse array of stakeholders at the local level.” A Coordination Group consisting of five representatives of local government and seven experts appointed by North Carolina’s attorney general, legislature, and Department of Health and Human Services will audit the expenditures.
Throughout the conversation, Beach-Ferrara repeated that Buncombe has long been exercising the “evidence-based, high-impact” strategies recommended. So, she expected the county would be able to select the first option. Even though the intent at several levels is to get settlement proceeds to beneficiaries, “as quickly, effectively, and directly as possible,” Beach-Ferrara said the second option imposes delays with a planning and approvals process.
In Other Matters –
Director of Economic Development and Governmental Relations Tim Love said the county is in the process of developing a request for proposals for a broadband service provider. Love said Federal Communications Commission maps of areas without or with inadequate service severely underestimate the problem. For example, they show 100% coverage for Madison County. Love, therefore, worked with UNCA students to get more helpful data.
Currently, North Carolina General Statutes only allow local governments to construct infrastructure for internet service; they cannot own infrastructure or provide service except for government purposes. Two bills now in the pipeline that might make things easier would allow local governments to expand, sell, or lease infrastructure and use state and federal funds for expansion. This is timely, in light of anticipated COVID relief funding.
Note: Image courtesy of Hal Gatewood.