Loading...
HomeMy WebLinkAbout2023-03-07; City Council; ; Authorizing Participation in Upcoming and Future National Prescription Opiate Litigation SettlementsCA Review CKM Meeting Date: March 7, 2023 To: Mayor and City Council From: Scott Chadwick, City Manager Staff Contact: Cindie K. McMahon, City Attorney cindie.mcmahon@carlsbadca.gov, 442-339-2891 Subject: Authorizing Participation in Upcoming and Future National Prescription Opiate Litigation Settlements District: All Recommended Action Adopt a resolution authorizing the City Attorney to sign the necessary documents for the City of Carlsbad to participate in upcoming and future National Prescription Opiate Litigation Settlements. Executive Summary New settlements against several pharmaceutical manufacturers and pharmacies have been reached in the National Prescription Opiate Litigation. To participate in and receive funds from these settlements, the City Council must authorize a city representative to sign settlement- related documents. The deadline to sign these documents is April 18, 2023. The proposed resolution authorizes the City Attorney to sign the necessary documents to participate in these new settlements and any future National Prescription Opiate Litigation settlements. The funds from these settlements must be spent for opioid epidemic remediation and abatement activities. Discussion Background In December 2021, the City Council authorized the city’s participation in nationwide settlements to resolve opioid-related litigation brought by states and local governments against the three largest pharmaceutical distributors, McKesson, Cardinal Health and AmerisourceBergen, and manufacturer Janssen Pharmaceuticals Inc. and its parent company Johnson & Johnson. The city has received $144,011 from the distributors’ settlement and expects to receive $84,317 from the Janssen settlement this year. Additional distributions to the city will occur annually for up to 18 years for the distributors’ settlement and up to 9 years for the Janssen settlement. These funds can only be spent on programs related to opioid epidemic remediation and abatement. March 7, 2023 Item #7 Page 1 of 5 New national opioid settlements Recently the city was notified that additional settlements have been reached against two pharmaceutical manufacturers, Teva and Allergan, and three pharmacies, CVS, Walgreens and Walmart. The city is not a named litigant, but is eligible to participate in the settlements if it chooses. Settlement terms The terms of the settlement agreements with the manufacturers and pharmacies require: • Teva to pay up to $3.34 billion over 13 years and to provide either $1.2 billion of its generic version of the drug Narcan over 10 years or an agreed upon cash equivalent over 13 years • Allergan to pay up to $2.02 billion over 7 years • CVS to pay up to $4.90 billion over 10 years • Walgreens to pay up to $5.52 billion over 15 years • Walmart to pay up to $2.74 billion in 2023, and all payments to be made within 6 years The settlements also contain injunctive relief governing opioid marketing, sale, distribution, and/or dispensing practices. In order for these settlements to occur, a sufficient number of states must agree to participate in the settlements. California has chosen to participate in them. The next phase of the settlements allows the political subdivisions (counties, cities, and special districts) within each participating state to opt into the settlements. The settlements require certain thresholds of participation by the political subdivisions within each participating state. If the thresholds are not met, the settlements may not become effective. The portion of the settlements that will be distributed to each participating state also depends on the number of subdivisions within that state that decide to participate in the settlements. Any subdivision that does not participate cannot directly share in the settlement funds. The exact portion of the funds that will be paid to California and to the city, if the city chooses to participate in the settlements, has not been determined. Each settlement agreement has different participation thresholds and mechanisms for determining the apportionment of the settlement funds.1 Use of the settlement proceeds Similar to the proceeds from the prior settlements, any settlement funds the city receives from the settlements with the manufacturers and pharmacies is restricted to uses related to opioid epidemic remediation and abatement activities. Participation If the city wishes to participate in these new settlements, the city must adopt a resolution (Exhibit 1) authorizing a representative, which is proposed to be the City Attorney, to sign the required participation documents. The documents must be signed by April 18, 2023. Future Opioid Settlements The city has not participated as a named party in the litigation. However, the city has benefitted by receiving funds from these settlements which can be used for programs in the city 1 More information on the litigation and settlements, including full copies of the settlement agreements, can be found on the National Opioids Settlement website, nationalopioidsettlement.com March 7, 2023 Item #7 Page 2 of 5 addressing the opioid epidemic. The proposed resolution authorizes the City Attorney in consultation with the City Manager to enter into future similar settlements if doing so would benefit the city or its residents. The City Attorney will update the City Council if the city is eligible to participate in any new settlements but would not need to return to the City Council for authorization to participate in the settlements on behalf of the city. The City Council could rescind this authorization at any time by resolution. Fiscal Analysis The city will not be able to determine the exact dollar amount of the settlement funds that will be paid to the city until the settlement agreements become final, which will not occur until after the April 18, 2023 participation deadline. Options If the city does not participate in the settlements, its share of the settlement proceeds will go to the State of California and the city will not receive any funds directly from the settlement. Because the settlement amount California receives is dependent upon the participation rate of local subdivisions, including the City of Carlsbad, the total amount that the state receives may be reduced if the city declines to participate. In addition, if enough subdivisions within the state choose not to participate in the settlements, those settlements may not become effective. Next Steps If the City Council adopts the resolution, the City Attorney will sign the necessary documents for the City of Carlsbad to participate in the settlements with the manufacturers and pharmacies. The City Manager will provide the City Council with more information about potential uses of the city’s share of the settlement proceeds at a later date. If new similar settlements occur in the future, the City Attorney will consult with the City Manager to determine if the city will receive a benefit by participating in those settlements and will notify the City Council regarding the details of those future settlements. Environmental Evaluation The recommended action does not constitute a project within the meaning of the California Environmental Quality Act under California Public Resources Code Section 21065 in that it has no potential to cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. Exhibits 1. City Council resolution March 7, 2023 Item #7 Page 3 of 5 Exhibit 1 March 7, 2023 Item #7 Page 4 of 5 RESOLUTION NO. 2023-071 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE CITY ATTORNEY TO SIGN THE NECESSARY DOCUMENTS FOR THE CITY OF CARLSBAD TO PARTICIPATE IN NATIONAL PRESCRIPTION OPIATE LITIGATION SETTLEMENTS WHEREAS, proposed nationwide settlement agreements have been reached that would resolve National Prescription Opiate Litigation brought by states, local political subdivisions, and special districts against two pharmaceutical manufacturers, Teva and Allergan; and three pharmacies, CVS, Walgreens and Walmart; and WHEREAS, the deadline for eligible cities and counties, including the City of Carlsbad, to join the Settlements is April 18, 2023; and WHEREAS, the settlements will provide substantial funds for opioid epidemic remediation and abatement activities in California and throughout the United States, and they will require changes in the way that the settling defendants conduct their business; and WHEREAS, the amount of funds received by the State of California is dependent on the number of local jurisdictions participating in the settlements; and WHEREAS, the City of Carlsbad will not receive a portion of the settlement funds and the State of California may receive less settlement funds unless the City of Carl sbad elects to participate in the settlements; and WHEREAS, the City Council of the City of Carlsbad has determined that it is in the best interest of the City of Carlsbad to participate in the settlements; and WHEREAS, additional settlement agreements with other defendants in the National Prescription Opiate Litigation may be reached in the future; and WHEREAS, the City Council has determined that it is in the best interest of the City of Carlsbad to participate in future settlement agreements in the National Prescription Opiate Litigation if those agreements will provide financial or other benefits to the city. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2.That the City Attorney is authorized to sign the necessary documents for the City of Carlsbad to participate in the National Prescription Opiate Litigation settlement agreements with Manufacturers and Pharmacies. 3.That the City Attorney, after consulting with the City Manager, is authorized to take any steps necessary for the city to participate in any future National Prescription Opiate Litigation settlement agreements if the City Attorney and City Manager agree that the city's participation in the settlement agreements would provide financial or other benefits to the city. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 7th day of March, 2023, by the following vote, to wit: AYES: NAYS: ABSTAIN: ABSENT: Blackburn, Bhat-Patel, Acosta, Burkholder, Luna. None. None. None. KEITH BLACKBURN, Mayor SHERRY FREISINGER, City Clerk (SEAL) March 7, 2023 Item #7 Page 5 of 5