Pache.co Information Technologies

by Mark Craddock
COLORADO — Colorado will receive some $385 million of the $26 billion opioid agreement with the nation’s three major pharmaceutical distributors and one pharma manufacturer, approved late last month.

The companies — Cardinal, McKesson, AmerisourceBergen and Johnson & Johnson — will start releasing funds to a national administrator on April 2, 2022, Colorado Attorney General Phil Weiser announced.

Money will start flowing to state and local governments this summer or early fall, he said. The Johnson & Johnson settlement money will be paid over nine years and the settlement from the big three drug distributors will be paid over 18 years.

One stipulation of the settlement hammered out in 2021 includes large incentive payments based on how many local governments participate. In the fall of 2021, the attorney general’s office began circulating a memorandum of understanding (MOU) among Colorado’s 64 county governments and 272 municipalities in an attempt to fulfil that requirement.

In addition to the MOU, local governments were asked to sign the “Colorado Subdivision Escrow Agreement” which calls for their legal claims to be released only if participation among municipalities reaches 95% by the Jan. 2, 2022, deadline.
Also, the defendants had the option to walk away from the deals if there is not enough participation, so it is important that a “critical mass” of local governments is reached. Otherwise, the entire deal could fall through.

According to the Colorado Department of Local Affairs, there are 272 municipalities in Colorado, meaning buy-in for now is about 67% with just over six weeks to go till deadline.

Huerfano County, first in line to sue, was also among the first to approve the MOU on Oct. 11, 2021. In early 2022, the attorney general reported that all Colorado Counties and more than 95% of municipalities had signed the MOU, helping pave the way for the recent settlement.

“Colorado has already laid the groundwork for distribution of these dollars, with all 64 counties and nearly all of our state’s municipalities poised to work together to address the opioid crisis in our state,” Attorney General Phil Weiser said last week. “I am grateful to local governments statewide for their commitment to protecting our residents and that they are, in many cases, already strategizing how these dollars can best serve their communities.”

The Colorado MOU is specific and detailed on how governments may use the settlement funds. All participants in the framework must use the funds they receive for opioid abatement purposes such as drug treatment, recovery, prevention and education, and appropriate harm-reduction programs, as well as addressing the epidemic’s impact on the criminal justice system.

But its plan for calculating how the settlement pie is sliced, is a bit more Byzantine.
Under the terms of the MOU, 10% of the settlement funds will go directly to the state, 20% will go directly to participating local governments and 10% will be dedicated to statewide infrastructure projects related to opioid abatement.
The MOU divides the state into 19 regions and the lion’s share of the settlement, 60% of the funds, is earmarked for those regions. The governmental entities within each region will have two years to develop an organization to oversee and disburse those funds.

Each region will receive a percentage based on several factors, Pacheco said, including population and local impact from the opioid crisis.

“These regional collaboratives will have their own governing boards comprised of public officials from local governments in the region, will conduct their own needs assessments, and will develop community-specific plans for spending the funds they receive for opioid abatement programs,” the attorney general’s office said in an August release.
Huerfano and Las Animas counties will be in Region 19, the Southeast Region, along with Pueblo, Crowley, Kiowa, Otero, Bent, Prowers and Baca counties. Region 19 will receive 7.458% of the 60% earmarked for the “regional share.”
Pacheco said it will be up to each region’s governing board to determine how the funds will be spent and what amounts may flow to each entity within a region.

But the 20% earmarked specifically for local governments will flow directly to the local governments without a regional bureaucracy in between. Under the plan, Huerfano County would receive 0.2505% and Las Animas County would receive 0.6304%.

The agreement marks the culmination of three years of negotiations to resolve more than 4,000 claims filed by state and local governments across the country. In early 2018, Huerfano County was the first local government in Colorado to sue for damages related to widespread opioid abuse and addiction.

The attorney general’s office said the agreement is the second-largest multistate settlement in U.S. history, second only to the 1998 Tobacco Master Settlement Agreement.

In addition to providing funds to the states, the big-three distributors agreed to:
• Establish a centralized independent clearinghouse to provide all thee distributors and state regulators with aggregated data and analytics about where drugs are going and how often, eliminating blind spots in the current systems used by distributors;

• Use data-driven systems to detect suspicious opioid orders from customer pharmacies;
• Terminate customer pharmacies’ ability to receive shipments, and report those companies to state regulators, when they show certain signs of diversion’
• Prohibit shipping of, and report to authorities, suspicious opioid orders;
• Prohibit sales staff from influencing decisions related to identifying suspicious opioid orders;
• Require senior corporate officials to engage in regular oversight of anti-diversion efforts.

Johnson & Johnson is required to:
• Stop selling opioids;
• Not fund or provide grants to third parties for promoting opioids;
• Not lobby on activities related to poioids;
• Share clinical trial data under the Yale University Open Data Access Project.