Kentucky and its local governments will share more than $483 million from opioid manufacturers and distributors as part of the National Prescription Opiate Litigation.
Kentucky Deputy Attorney General Victor Maddox explained at Tuesday’s Interim Joint Committee on State Government that Kentucky will place 50% of the state’s money in its Opiate Abatement Trust Fund (OATF), which oversees the commonwealth’s share of settlement proceeds. Legislators established the OATF with House Bill 92 in the 2022 session. The KLC initiative clarifies how Kentucky distributes the funds. A 2021 KLC initiative, House Bill 427 required the state to distribute the other half of the settlement money to local governments. Payments should begin in July 2022 and spread over the next 16 years, with the final installments scheduled for July 2038.
Maddox told the committee the settlement money comes from three distributors – McKesson Corporation, Cardinal Health, and AmerisourceBergen Drug Corporation – and from drug manufacturer Janssen, a subsidiary of Johnson & Johnson, which manufactures certain opioid products.
According to Maddox, the state’s total of $483 million represents roughly 2.09% of a $26 billion global settlement. Negotiation metrics will determine the amount of money going to individual local governments.
Maddox said there is pending litigation in Kentucky, including cases in Fayette, Franklin, and Boone counties against other manufacturers and distributors as well as against CVS and Walgreens. “CVS is a new case that we filed in 2021. CVS and Walgreens obviously are pharmacies, and they are responsible in many respects for a lot of the abuses in the distribution of opioids over the course of the years. In some cases they are distributors, and in some cases they are dispensers. That case is fairly new, but it’s one we are pursuing vigorously. The same with Walgreens,” he said.
Deputy Director for Policy Blake Christopher said recipients must spend the money on the abatement of opioids, and he said there will be an accountability process. “As you all know, thanks to HB 427, all funds, whether they go to local governments or the commission, must be spent on opioid abatement. We have to spend these dollars on opioid abatement or we risk the settlement itself,” he said. “Local governments and recipients of commission funds must submit regular certifications of compliance. HB 427 provides for annual certification, so we generally can keep up with what the money’s being spent on and that it’s definitely going toward opioid abatement.”
Bryan Hubbard from the Office of Attorney General Daniel Cameron serves as executive director of the Kentucky Opioid Abatement Advisory Commission. He said the commission will begin meeting later this summer in locations throughout the state. The first meetings will address drafting and publishing regulations. Hubbard said the commission expects to have an online application process ready by the end of this year for grants for abatement activity near the end of 2022. The commission will begin reviewing and awarding grants at the beginning of 2023.
Rep. Jason Nemes (R-Louisville) and Sen. Phillip Wheeler (R-Pikeville) asked why doctors who prescribed the drugs are not being held accountable.
Maddox said he would take the suggestion back to Attorney General Cameron. Hubbard assured legislators that there is a list of physicians within the Medicaid fraud office who are the subjects of a criminal investigation. “One of the things that hobbles our enforcement ability within the state to prosecute prescribing behavior as part of trafficking is that there is no legal framework to do that,” Hubbard said. “I think some folks in my office would very much like to bring direct prosecution of physicians for the prescribing behavior, but we’ve got to have the legal authority to do that.”
Rep. James Tipton (R-Taylorsville) asked about measures Kentucky is taking to ensure recipients do not use settlement funds for duplicated or overlapping programs. “Do you see the ability to work cooperatively with the cities and counties and partner with them on how these funds are distributed?” he asked. “Because these are limited funds, and we’re making a huge investment.”
Hubbard said making sure there is no wasteful repetition will be a priority. “We want to make sure that there is as much communication and coordination between the work of the commission and the work of the counties and cities so that we are delivering focused and linear services, however those are defined,” Hubbard said. “We will absolutely do everything that we can to ensure that insofar as there is redundancy, that that is purposeful and intended to be so, rather than just wasteful and repetitious.”