Jennifer Oliva’s insightful commentary on Oklahoma’s settlement with Purdue Pharma and the Sackler family detailed the settlement terms and posed important questions about the sufficiency of the agreed damages. I’d like to push a little further on a couple of fronts.
First, what does the journey from Cleveland, Ohio to Norman, Oklahoma tell us about the opioid litigation and the multi-district (MDL) process, some aspects of which I have addressed elsewhere. Second, while dollar figures (expressed in profits, harms, and even philanthropy) have dominated the headlines, should we be paying more attention to non-monetary remedies?
As to the first, of course it shouldn’t have turned out like this. Twelve months ago the wind was in the sails of Judge Polster’s MDL ship in Cleveland. Highly knowledgeable and experienced lead lawyers on both sides, a judicial expectation that the case should be settled before the end of 2018, and early bellwether trials to nudge along the hesitant were all pointing to an early and efficient settlement of the 1600 federal cases consolidated in Cleveland.
So what, if anything, went wrong? How did the MDL litigation find itself “stuck in glue”?
Maybe the incentives between the defendant groups and the plaintiff groups were insufficiently aligned. For example, how did the pharmacy benefit managers feel about being scooped up in another Big Pharma mess? How closely would the tribal nations align themselves with the political units that had so “represented” their interests in the past? Where did the NAS babies’ request for a $1 billion trust fund fit in? Then there was the “Oklahoma question” itself: what was Judge Polster going to do about cases that states were bringing before their own courts? Or, stated somewhat differently, would the Cleveland defendants ever agree to something less than a global settlement?
Finally (and welcome to the realm of pure speculation), did the epicenter of the litigation shift as allegations against the Sackler family (which they strenuously deny) hit the front pages? The opioid litigation has always seemed slightly off-kilter. Here was possibly the public health disaster of our generation. However, it was not caused by, say, the kind of bureaucratic misfeasance alleged in the Flint water crisis or in deaths caused by tobacco products that for decades the Surgeon General had told us to avoid. Rather, (at least pre-fentanyl) this was a public health disaster caused by a government regulated product; one that millions of patients in hospice or recovering from surgery still need and new formulations of which the FDA continues to approve.
What the opioid litigation lacked was the smoking gun beloved of litigators or headline-grabbing bad actors. And then, suddenly, we had both. The complaint filed by the Massachusetts Attorney General in January 2019 contained some incendiary allegations about the Sackler family’s profit-taking and their orchestration of the over-promotion of OxyContin. Piling on, the deposition testimony of a member of the Sackler family in the Oklahoma case became public and hit on similar themes. Once that happened, Purdue and the Sacklers (rightly or wrongly) were separated from the herd, the other MDL defendants. From the standpoint of the plaintiffs, particularly the freelancing state attorneys general, the immediate targets now were the Sackler family fortune and anything to be squeezed out of Purdue before its law firm and new board Chairman with expertise in corporate restructuring played their expected bankruptcy hand.
What about the other key parties in Cleveland, the lead plaintiff and defense law firms and the defendants (only the naïve would include the plaintiffs in that list!)? Maybe they thought it was a good time to be stuck in glue waiting to see if Purdue does file for bankruptcy and hope that, as they exit stage left into Chapter 11, the alleged smoking guns go with them. However, those in Cleveland may learn little from the Oklahoma trial against the remaining defendants scheduled for May 28, as the Oklahoma Attorney General has thinned down his causes of action to just public nuisance and has requested a non-jury trial.
So, to my second question, where are the non-monetary remedies befitting a public health crisis? In the Oklahoma settlement the monetary and public health remedies are somewhat intermingled. As Jenn noted, the settlement provides Oklahoma State University with $102.5 million for an addiction and treatment center ($15 million per year for five years and, no, the math doesn’t work for me either!) and $20 million in opioid treatment medications, plus another $75 million for OSU directly from the Sackler family. The rest of the settlement will be split between Oklahoma tribes, cities, and counties (an astonishingly small $12.5 million) and as much as $60 million to cover attorneys’ fees and litigation costs.
Clearly the $270 Oklahoma settlement sets a new benchmark in opioid settlements, dwarfing Purdue’s $10 million settlement with West Virginia in 2004 or the $24 million with Kentucky in 2015. However, $270 million is a relatively small amount compared to the estimated one trillion dollars that the epidemic cost the U.S. between 2001 and 2017 and the projected costs of five-hundred-billion dollars by 2020. It is also a small amount compared to Oklahoma’s original $20 billion claim against the manufacturers or the estimated $35 billion Purdue has made in profits from OxyContin.
While some smaller states may see $270 million as a good target for their own settlement ambitions, others may be less impressed. For example, New York state has a population roughly six times that of Oklahoma and a higher per capita opioid overdose death rate. New York City alone is seeking $500 million from the opioid manufacturers.
The non-monetary remedy question has been prompted by comparisons drawn between the opioid litigation and the 1998 Tobacco Master Settlement Agreement (MSA). In most states surprisingly little of the $246 billion tobacco settlement has ever been used to reduce tobacco consumption or build resilience in communities that suffer from poor public health. On average, states allocated just thirty percent of their annual settlement receipts to health care (including, for example, funding Medicaid) and 22.9 percent to cover budget deficits. As Micah Berman points out, legally it is very difficult to constrain how states spend such funds; “The only approach so far that has succeeded in protecting tobacco settlement funds from diversion is a state constitutional amendment, as was used in Florida.”
Notwithstanding, the tobacco settlement did place some restrictions on industry behavior, such as limitations on certain advertising and marketing to children, the creation of a research and educational foundation focused on teen smoking and smoking cessation (the public health remedies). Are there not some parallels in the opioid context worth exploring?
The Oklahoma settlement seems to lack any innovative approaches. At a news conference the Attorney-General announced that Purdue will be prohibited from marketing opioids, including detailing, in Oklahoma. However, that is hardly a breakthrough as Purdue had already made such a national commitment earlier this year. This approach also misses the point that opioids are not tobacco-like substances that should be regulated out of existence, but are FDA approved pharmaceuticals subject to labeling and marketing restrictions that continue to have a place in treating various types of pain including post-operative and hospice care.
A better approach would be to keep the manufacturers on the hook and liable for the abatement of the problem they caused. Although Oklahoma will be receiving a one-time supply of medication, a better solution would be to demand that the drug makers fund the country’s supply of overdose reversal and treatment drugs until the crisis is abated. This somewhat resembles the approach attempted in New York with its Opioid Stewardship Act designed to tax all opioid distributions. However, that model is now in limbo after a federal district court ruled it unconstitutional because of its impact on interstate commerce.
Combating addiction and providing treatment are university projects that deserve funding. They are also improvements over the states’ use of most of the tobacco moneys for general operating budgets rather than investing in tobacco cessation. However, it is wholly unlikely that, even if the other defendants settled for similar amounts, the people of Oklahoma will be made whole or that the social determinants of health that underlie addictions will be successfully addressed. For those goals to be addressed both monetary and non-monetary remedies of a different level of magnitude should be demanded and then targeted upstream.