Biden promised a watchdog for opioid settlement billions, but feds are quiet so far

Early in President Joe Biden's tenure, his administration promised to play a key role in ensuring opioid settlement funds went toward tackling the nation's addiction crisis.

During the 2020 campaign, Biden had laid out a plan to appoint an "opioid crisis accountability coordinator" to support states in their lawsuits against companies accused of sparking the overdose epidemic. The following year, the White House convened a meeting about the soon-to-be finalized settlements, noted that the money could support drug policy priorities, and helped create a model law that states could adopt in anticipation of receiving funds.

But today, as billions of dollars actually start to flow and state and local leaders make crucial decisions on how to spend the more than $50 billion windfall to tackle this entrenched public health crisis, the federal government has gone mostly quiet.

No federal employee holds the title of opioid crisis accountability coordinator. The Office of National Drug Control Policy has not released public statements about the settlements in over a year. And the settlement funds are mentioned just twice in a 150-page national strategy to reduce drug trafficking and overdose deaths.

'Huge pots of money'

The federal government is not legally obligated to engage in the discussion. After all, states filed the lawsuits against companies that made, sold, or distributed opioid painkillers, including Johnson & Johnson, McKesson, and Walmart.

But there is an expectation that the federal government, including the nation's leading agencies on mental health and addiction, should play a role. Public policy and health experts say a vacuum of federal leadership could lead to serious wasted opportunities and missteps in the use of the billions that will be paid out over nearly two decades — in what could be an unfortunate reprise of the multibillion-dollar 1998 settlement with tobacco companies.

"States get wide eyes when they get these huge pots of money," says Bill Pierce, who served as spokesperson for the Department of Health and Human Services in the early 2000s. He was there when states began receiving cash from the tobacco settlement. Soon enough, money "starts to seep out to other areas that could be completely unrelated," he says.

Back then, tobacco companies agreed to pay states billions annually for as long as they continued selling cigarettes. But there were no restrictions on the money's use and much of it went to plugging state budget gaps, filling potholes, and even subsidizing tobacco farmers. Today, less than 3% of the annual payouts support anti-smoking programs.

Protecting the opioid cash

The opioid settlements have a built-in protection to address this concern. At least 85% of the money states receive must be spent on opioid-related expenses. But interpretations of qualifying expenses vary widely — often based on state politics. And oversight so far has been weak. The companies paying out the money are responsible for holding states to that threshold, but they're unlikely to monitor closely, legal experts say.

Public vigilance could help, but most states have promised little to no public reporting, making it difficult to track their use of funds. KFF Health News is following how state and local governments use — or misuse — the cash through this year.

Some people hope the federal government can fill this gap in oversight.

"There are opportunities to incentivize" and support state and local governments "in the right direction," says Michele Gilbert, a senior policy analyst with the think tank Bipartisan Policy Center. The Biden administration can issue official guidance, promote the findings of national research, or leverage the power of its purse strings. But so far, "there hasn't been a lot of federal government action on the settlement."

The Office of National Drug Control Policy told KFF Health News it regularly discusses the use of settlement dollars with governors, mayors, and other elected officials to ensure the money bolsters federal efforts already underway. Beating the opioid epidemic by disrupting drug trafficking and expanding access to treatment is one of the four pillars of Biden's "unity agenda."

"We know that expanding access to treatment for substance use disorder, lifesaving interventions like naloxone, and recovery support services will reduce the harms of addiction and the overdose epidemic," said Rahul Gupta, director of national drug control policy.

That's why the administration helped create a model law, as "a blueprint for states and communities on evidence-based ways to use opioid settlement funds," he said. It's been adopted, at least in part, by 11 state legislatures and is being considered by two others.

Lessons in lax oversight

But history suggests optional federal guidance may not be enough to ensure the money is used for its intended purpose.

Matthew Myers, president of the nonprofit Campaign for Tobacco-Free Kids, said it was a mistake for the federal government to take a back seat on the tobacco master settlement more than two decades ago.

Those lawsuits aimed, in part, to recover health care costs for smoking-related illnesses. Medicaid, a public insurance program for people with low incomes or disabilities, was a leading payer. Since Medicaid is jointly funded by the U.S. and state governments, federal authorities had a right to some of the settlement money.

States lobbied Congress to forgo that claim. Myers and other advocates asked legislators to do so only if they required states to spend at least 25% of the funds on anti-smoking efforts.

But Congress waived its right to the money unconditionally.

"It was a significant missed opportunity," Myers says, "because it meant the federal government ended up having no say whatsoever in how the dollars were used."

When it comes to the opioid settlements, it's not clear if the federal government will try to claim repayment for Medicaid expenses linked to opioid addiction, which was estimated at $23 billion in 2019. Bruce Alexander, spokesperson for the Centers for Medicare & Medicaid Services, declined to answer specific questions and simply wrote, "CMS is currently reviewing the issue."

The agency has tried to recoup costs in at least one case.

In 2019, CMS sent a letter to Oklahoma asking for part of the state's $270 million settlement with Purdue Pharma, maker of OxyContin. According to Phil Bacharach, spokesperson for the Oklahoma attorney general's office, the state eventually reached an agreement to keep all its Purdue settlement but later pay $390,000 to the federal agency from a separate settlement with opioid manufacturer Endo.

Some states, like Arkansas and Oregon, have planned for similar possibilities in their public documents about the opioid settlements. But as of mid-March, neither state had received federal requests for their share.

A carrot-and-stick approach

Health policy experts suggest the Biden administration could use the possibility of claiming those funds as leverage: In return for allowing states to keep the cash, it could require all of it be spent on addressing the opioid crisis or be used only for treatments backed by research.

Alternatively, it could attach conditions to the more than $6 billion in federal grants that goes to states each year to address addiction.

"The federal government is spending a lot of money on opioids," says Pierce, the former HHS spokesperson. "If they want, they could try and tie that money to requirements that settlement money be spent on opioids."

In the 1970s, the Nixon administration used a similar tactic, with federal transportation funding as the carrot. Given the energy crisis at the time, the administration wanted states to reduce oil consumption by imposing a maximum speed limit of 55 mph. But it couldn't mandate states to do so. Instead, Nixon signed a law saying states could receive federal highway funding only if they lowered speed limits. In the end, all states complied.

Myers, of the Campaign for Tobacco-Free Kids, put it this way: "States will only listen to the federal government if there's a financial reason to do so."

The federal government also can suggest the settlements be used to augment, not duplicate, existing federal funding, said Gilbert, of the Bipartisan Policy Center.

For instance, the money could support grassroots organizations that don't have the time or ability to apply for federal grants, she said. Or it could go to groups that provide sterile syringes and other supplies to people using drugs, which can't be purchased with taxpayer dollars.

The federal government can emphasize the more flexible options for spending the settlement money compared with federal funds, Gilbert said.

The Biden administration has been the first to embrace grassroots programs and has called for sustainable funding for "harm reduction services" in its national overdose prevention strategy. But it has stopped short of explicitly recommending settlement funds for this purpose.

Such initiatives are designed to minimize the risks of using drugs but are politically fraught, with critics saying they encourage illegal activity and supporters saying they save lives. Local opposition often takes the form of "not-in-my-backyard" or questions about why certain neighborhoods bear the brunt of addiction and homelessness concerns.

In such turf disputes, the lack of federal leadership is acutely felt, say some advocates.

For example, in New York, Democratic Gov. Kathy Hochul rejected a recommendation to use opioid settlement funds to support two overdose prevention centers — places where people can use illicit drugs under supervision. She cited "various state and federal laws" that make such sites illegal. A similar conversation is taking place in San Francisco, with the mayor citing a lack of federal legal clarity on the issue.

Federal authorities haven't acted to shut down any sites so far but haven't publicly supported them either. The Office of National Drug Control Policy declined to comment, given ongoing litigation in a related case in Philadelphia.

Some people question whether the Biden administration's weighing in would have much impact, given the deep political divisions in some states where local officials are eager to flout federal guidance. Earlier this year, Republican leaders in Tennessee rejected millions of dollars in federal funding for HIV prevention to push back on federal support for transgender and abortion rights.

But Regina LaBelle, who was acting director of national drug control policy during Biden's early years and now works for Georgetown University's O'Neill Institute, says the federal government has managed to guide state policy on controversial topics before.

In 2015, shortly after intravenous drug use sparked a major HIV outbreak in Scott County, Indiana, the Centers for Disease Control and Prevention published a study showing other counties were similarly vulnerable. Kentucky, identified as a hot spot, went on to implement policies that dramatically increased the number of syringe service programs, which are known to reduce HIV transmission.

Today, the Biden administration could provide data to similarly inform local decisions, LaBelle says. A national dashboard launched late last year to show nonfatal overdoses is a start. And there is time to build on that, since the opioid settlements will be stretched out over many years, she added.

"We have an opportunity to see what's the appropriate role of the federal government," LaBelle says. "It's not too late."

KFF Health News, formerly known as Kaiser Health News (KHN), is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling, and journalism.