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January 28, 2022

Philly joins Pennsylvania's $1 billion opioid settlement after initial criticism from city officials

The agreement requires that all of the money be put towards programs that address substance abuse issues

Lawsuits Settlements
Philadelphia Pennsylvania opioid settlement Kate Frese/For PhillyVoice

At least $186 million will be allocated to Philadelphia over the next 18 years as part of Pennsylvania's $1 billion opioid settlement.

Philadelphia has agreed to sign onto Pennsylvania's $1 billion settlement with three opioid distributors and manufacturer Johnson & Johnson after city officials initially criticized the deal.

The city will receive $186 million over the next 18 years as part of the agreement, as well as an undisclosed amount of additional funding due to the toll of the opioid epidemic on Philly, according to Mayor Jim Kenney's office. 

By joining the settlement, Philadelphia is required to drop its lawsuit against Johnson & Johnson and the three opioid manufacturers.

The Philadelphia District Attorney's Office initially opted not to sign onto the state's opioid settlement, saying in a statement Thursday that it pledged to "continue to pursue accountability and meaningful compensation."

District Attorney Larry Krasner said that Philadelphia deserves "deep, sustained compensation in the form of billions of dollars from these companies, which regularly exploit all manner of corporate loopholes while refusing to take any real responsibility for the devastation they have unleashed in communities."

Because the mayor and district attorney filed separate lawsuits, neither's decision over whether to enter into the settlement impacts the other. Krasner's decision to pursue further litigation does not prevent Philadelphia from receiving its full payout; Kenney's decision to drop his administration's lawsuit does not preclude the district attorney from moving forward in court.

All 67 Pennsylvania counties, as well as a group of more than 240 municipal governments that had filed lawsuits, have signed onto the state's opioid settlement. The agreement will deliver $1 billion to Pennsylvania over the next decade, with $232 million expected to be distributed this year. 

Because each county and municipality with litigation agreed to the settlement, Pennsylvania will receive the maximum payment that it is owed in the agreement. Had Philadelphia or another jurisdiction declined to join, the city would not have received funding and Pennsylvania's total share would have been reduced.

The funding will be distributed to communities starting in April. The settlement requires that all money must be put towards programs that address opioid addiction treatment. Local jurisdictions will be tasked with determining where the funds are distributed in their respective communities.

Roughly $700 billion will go towards county governments, which are primarily responsible for providing opioid addiction recovery services, according to the attorney general's office. The remaining $300 billion will be split between the state and local municipalities.

“Every community in Pennsylvania has been touched by the opioid crisis — it has ravaged our towns, our families and our state," Attorney General Josh Shapiro said. "This agreement marks the most significant influx of resources to our commonwealth to address this epidemic, jet-fueled by greedy pharmaceutical companies." 

A total of 50 counties had signed onto the settlement before the end of 2021. That group included Bucks, Chester, Delaware and Montgomery counties. The four Philly suburban counties are slated to receive $147 million as part of the deal, the Inquirer reported.

The original deadline to join the agreement was Jan. 2, but with seven counties – mostly notably Philadelphia – having yet to hop on-board, Pennsylvania pushed the deadline back more than three weeks in order to give counties additional time to evaluate the deal. 

Pennsylvania was one of 14 states that agreed to a $26 billion settlement last summer with pharmaceutical distributors Cardinal, McKesson and AmerisourceBergen, as well as manufacturer Johnson & Johnson. 

The settlement is expected to resolve more than 4,000 lawsuits filed by state and local governments nationwide. Other states that are part of the agreement include Delaware, New York and Connecticut.

"While no dollar amount will bring back what we have lost, this settlement was negotiated to allocate funding to states and local communities who have been most impacted by this crisis, and will provide more resources for treatment than any previous settlement," Shapiro said. "I look forward to seeing the progress these resources will make in neighborhoods, treatment facilities and the lives of so many."

The agreement was sharply criticized by both Kenney and Krasner, who argued that the city deserved more compensation over a shorter time frame.

Krasner went as far as to file a lawsuit against Shapiro over the settlement last July, calling the agreement "deeply troubling" and "unacceptable." Krasner said that the deal would allow the defendants to "escape real accountability." 

The purpose of the lawsuit was to prevent Shapiro from interfering with any cases brought by the district attorney's office against opioid defendants, Krasner said. The city sued opioid defendants in 2018 and has been litigating the issue for more than three years. 

Krasner has argued that a Philadelphia judge should determine how much money the city receives and that Philly can receive more compensation by taking the pharmaceutical giants to court.

The attorney general's office has argued that Krasner didn't have the authority to sue and that the case was premature. Arguments in the case were heard by a Commonwealth Court judge last month, and a decision in the matter is pending.

U.S. opioid overdose deaths surged to a record 93,000 in 2020, an annual increase of 30% that has been accelerated by the spread of the synthetic opioid fentanyl. In Pennsylvania, opioid overdoses claimed the lives of more than 16,800 people between 2017-2020, including 5,172 deaths over the last year. Only California and Florida had a higher number of overdose deaths than Pennsylvania between 2015-2020, according to the district attorney's office.

Opioid-related overdoses accounted for approximately 85% of fatal overdoses in Philadelphia in 2020 and an average of three residents die per day from opioid overdoses.

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