Participation in the National Opioid Settlement

Nationwide settlements have been reached to resolve all Opioids litigation brought by states and local political subdivisions against the three largest pharmaceutical distributors: McKesson, Cardinal Health and AmerisourceBergen (“Distributors”), and manufacturer Janssen Pharmaceuticals, Inc. and its parent company Johnson & Johnson (collectively, “J&J”).  These settlements will provide substantial funds to states and subdivisions for abatement of the Opioids epidemic across the country and will impose transformative changes in the way the settling defendants conduct their business.

If the proposed settlements are fully adopted by states and subdivisions nationwide:

·         The Distributors will pay a maximum of $21 billion over 18 years, while J&J will pay a maximum of $5 billion over no more than nine years, with approximately $22.8 billion in settlement proceeds payable to state and local subdivisions.[1] .  Of the funds going directly to participating states and subdivisions, at least 85% must be used for abatement of the Opioid Epidemic, with the overwhelming bulk of the proceeds restricted to funding future abatement efforts by state and local governments. (SEE EXHIBIT E)

Oregon’s total payout is an estimated $330 million.  Cities/Counties are currently negotiating with the state regarding the terms of the payout.  The most recent Final Term Sheet is attached.  It has been fluid as the parties continue to negotiate.  The most important factor so far is that the parties have agreed to a split of 45% state and 55% local government.  That should make an estimated $180 million available for distribution direct to cities/counties.  The agreement allows for cities to elect to direct payments to counties.  Umatilla County and Pendleton are also participating.

Because of the length of each agreement below are links to the most current drafts.

Distributor Agreement (606 pages)

https://nationalopioidsettlement.com/wp-content/uploads/2021/11/Final-Distributor-Settlement-Agreement-10.22.2021-Exhibit-Updates_.pdf

Johnson and Johnson Agreement (190 pages)

https://nationalopioidsettlement.com/wp-content/uploads/2021/11/Janssen-agreement-20211105.pdf

The estimated local allocation percentage for Hermiston City is 0.1316304314%. This amounts to an estimated best-case scenario maximum dollar amount of $232,126. This is the total dollar amount for both the Distributor and Janssen deals, which are collectively paid over 18 years (Distributor paid over 18 years and Janssen paid over approx. 9 years). 

1.      Approve Resolution 2204

2.      Reject Resolution 2204

3.      Recommend amendments

Approve Resolution 2204

Motion to participate in the National Opioid Settlement and have the City Manager sign participation agreements for the national settlement and intrastate agreements regarding the allocation of funds when they are made available.