SMART Policy Podcast
Podcast by the UT SMART Initiative. Host Jeremy Kourvelas speaks with experts from across the recovery ecosystem - representing healthcare, prevention, law enforcement and more - about local, state and federal drug policy to find out what is and isn't working to make this fight against addiction a little easier.
SMART Policy Podcast
What's Happening with the Opioid Abatement Settlements?
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You're listening to the Smart Policy Podcast, a production of the University of Tennessee's Institute for Public Service. Starting with the multiple guilty pleas from Purdue Pharma in 2020, thousands of lawsuits across the country have led to a series of settlements from numerous pharmaceutical manufacturers and distributors for their role in the opioid crisis. From just the first and second wave of settlements with Cardinal Health, Janssen Pharmaceuticals, Americasur Spurgeon, CVS, Walmart, Walgreens, and several others, Tennessee is expecting to see a little over a billion dollars over the next 18 years.
SPEAKER_00Will it fix everything? Absolutely not. I don't think there's any amount of money that can get us to a place to completely, completely overcome the consequences of this. But a billion dollars will certainly help. I mean, when you think about all the costs associated with the opioid crisis over the last two, two, even three decades, they've been astronomical. I mean, these counties, especially the ones that don't have a lot of revenue coming in, are have have been having to use a lot of their funding to compensate for and offset those costs from opioid and drug-related issues.
SPEAKER_01Tennessee is actually rather unique in how it has decided to spend these funds. Unlike most of the other states who have planned to distribute most of the money directly to their counties, Tennessee has elected to open up a large amount of these funds to private entities who can apply for grants. This means nonprofits, prevention coalitions, clinics, researchers, and many other groups will have a chance of getting new projects funded or expanding their existing services without having to appeal to their local government. Though, of course, with a decent amount of money still going directly to Tennessee counties, they can try this route as well. So it's a lot to consider, and it can be confusing. We hope this episode can then serve as an introductory guide to local stakeholders in both the private or public sectors, shedding some light on one of the most important public health opportunities in our lifetimes. So this isn't the first time this has happened. Purdue pled guilty and and uh released some funds back in 2007. Tennessee, I think, got about$600,000 or something like that. It wasn't very much. Um and uh most of that went to attorneys' fees. This time is different. This is different companies, it's all coming into the state. Uh, but I understand we have a pretty unique setup here. We have the sort of they call it the three buckets setup, where we have 15% going to the state general fund, 15% going to subdivisions, and I'm gonna ask for what I'm gonna ask you in a minute what subdivision means, and then 70%, so the vast majority, going to the opioid abatement council. So before we get into the 15% of the state and the 15% to the subdivisions, could you tell me a little bit about the opioid abatement council and how the 70% is going to be split up?
SPEAKER_00Sure. So the opioid abatement council was assembled following 2021 legislation. So they will oversee the spending of 70% of the total amounts that come into the state. Right now, with the first wave settlements, um, that's going to be about$429 million. Out of that 70% that equals$429 million, 35% will go directly to counties in an annual payment. Um, and that is a set allocation. And we can go over the allocation in a little while, how they come to those numbers. Um, the other 65% of that 70% will go into a bucket of money for competitive grants. So the council will oversee how those funds are dispersed. Any organization in the state can apply for funds. They have a process developed for um submitting a proposal, a typical grant proposal. They'll score those proposals based on specific criteria, and then they will award funds based on that. Um, they began meeting in July of 2022. There are 15 voting members and then one non-voting member. The governor appointed four of the 15 members, the speaker of the house appointed four, the speaker of the Senate also appointed four, the Tennessee County Services Association appointed two people, and the Tennessee Municipal League appointed one. The nonvoting member is the commissioner of the Tennessee Department of Mental Health and Substance Abuse Services. And there is also an executive director that organizes and oversees the council.
SPEAKER_01Are there any requirements on this money going to the council, whether or not it's going directly to the counties or to the competitive grants, are there stipulations on what this money has to be spent on?
SPEAKER_00Oh, absolutely. There are what's being called approved remediation uses. It is a very long document. It's like 16 pages. There are some core strategies. Um, and there's about nine of those. And that includes things like, you know, purchasing and distributing the loxone to reverse overdoses and expanding harm reduction programs and prevention programs, expanding treatment for infants with NAS or pregnant mothers, people that are incarcerated. So there's core strategies, and then there is a very comprehensive list that's about 16 pages that includes all the approved uses. And you can find that on the Attorney General's website or on the opioid abatement council website.
SPEAKER_01Okay, great. So no roads and bridges then, like with the 12%.
SPEAKER_00No roads and bridges. No, all future remediation purposes.
SPEAKER_01I was wondering if we could then briefly talk about the 15 to the state and the 15% to the state general, uh, to the excuse me, subdivision funds. Um, are there any requirements there?
SPEAKER_00So the requirements on the 15% buckets of money, again, 15% that will be going directly to the state and 15% that will be going to subdivisions that signed on to the original um opioid settlement agreements, those work a little bit differently. So those do not funnel through the state. Those go directly from the organization called Brown Greer, which is the national opioid settlement um organizer. They send those payments directly to people who were on the original settlement agreements. And those subdivisions that receive that money, as well as the state, can use those funds for reimbursement for previous costs associated with opioid issues, or they can be used for future remediation. So that's going to work just a little bit differently.
SPEAKER_01So, what does that look like? What are what are past opioid-related expenses?
SPEAKER_00So basically, they can reimburse themselves for any expenses that are on that exhibit E list, that uh approved remediation uses. So anything that they've done in the past to remediate opioid use, such as maybe they've had a recovery court or something like that, they can reimburse themselves for those expenses and then use those funds for other purposes that are a need within the county.
SPEAKER_01So we'll talk about county direct payments from the uh opioid abatement fund in a minute, but that all has to be spent on future remediation. And the subdivision fund can be spent on reimbursement for past remediation or future remediation. Is it a good idea to prioritize future remediation then?
SPEAKER_00Yes, definitely. If you are using funds to reimburse yourself for past remediation, which you may need to do, and that's okay, um, but you're not addressing the problem. If you are paying for costs related to opioid overdoses or opioid addiction, and you're not addressing those issues, you're going to continue to pay for those issues. So spending it all on future remediation is definitely recommended.
SPEAKER_01It's also, I imagine, a more stable source of funding as the allocation percentage for subdivisions, it doesn't change, right?
SPEAKER_00Correct. So the allocation percentages were those were included in the original settlement agreements, and those will not change for the life of the subdivision payments. So it is more stable because the county abatement, those allocation percentages, those will change every four years, which means your payment amount will change every four years. So it is harder to project how much money you'll have coming in.
SPEAKER_01And I imagine, and we can talk about this too, because I understand how the amounts are determined play a huge part of this. But before I get too into that, I do understand that, you know, the 15% going to the state, it looks like all of that is going towards uh uh future-oriented programs. I just read a review of uh Governor Lee's new amended budget, and there is a huge increase in investment for mental health and substance use uh services. And and I would imagine uh a bit of that is if if not a good chunk, is coming from uh that uh 15%.
SPEAKER_00Well, I actually haven't seen that report, so I can't speak to it, but that would make complete sense. I mean, they are getting, you know, a a portion of that money, and I'm sure they want to use it to impact the state as best as they can. So that would make sense.
SPEAKER_01So before we get into the competitive grants going back to the opioid abatement council, though, um, we're we're talking about all these counties. Um, you mentioned that of the 70% going to the opioid abatement council, uh, 35% of those funds are going directly to counties. What's the difference between a county and a subdivision?
SPEAKER_00So a subdivision can be also a city, you know. So Knox County is Knox County, but Knoxville is the city of Knoxville. So the county could have signed on and the city could have signed on. So instead of it calling, you know, county sign on, it they're referring to it as subdivision, which is more comprehensive.
SPEAKER_01Am I to understand then that uh say you're a county that was involved in this legislation, you're getting money from the subdivision fund and from the opioid abatement council.
SPEAKER_00Exactly. Yes, you will get two different types of payments coming in. Again, one will be directly from Brown Greer, the opioid settlement, now the National Opioid Settlement Organizer. The other payment will come from the abatement council annually, um, which will be paid out through Edison.
SPEAKER_01Okay. I'd imagine anybody who works in government in Tennessee is familiar with Edison. Uh so this sounds like a lot of important accounting work to be done, uh, different funds, different line items.
SPEAKER_00Absolutely. Absolutely. Um, you know, some of the counties and cities are still working out how to, you know, what accounts to put this in, how to manage these funds. The reporting requirements will be different for these two buckets of money. Um, so that has to be considered as well. You know, if you put them all into the same account, it's harder to track what dollars went where. And then when you're reporting back, it can make it more difficult. Um, so there is some accounting considerations that that need to be taken.
SPEAKER_01It really does sound like we're taking this extremely seriously. Reporting requirements, uh that typically implies a potential future audit. I'm not saying any of that has been talked about yet, but it does seem like we're prepared for such a thing.
SPEAKER_00It is. Uh, it's my understanding that the county abatement funds, the one the payments that are coming directly from the abatement council through Edison to the counties will be audited just to ensure that they are spent on the approved remediation uses. But yes, taking it very seriously, everybody's taking it seriously. And a lot of people want to see this money hurry up and spend. Like we have this money, let's spend it, let's spend it, let's spend it because people are dying. And I completely agree. But we have to take our time and make sure everybody has to take their time, the state level, the county level, the subdivision level to make sure that all of this is managed correctly and allocated and spent correctly on proper uses. Otherwise, we're gonna find ourselves in a big mess.
SPEAKER_01Yeah, no kidding. And even again, just even just a sheer numbers game. It sounds like the money coming through the council going directly to counties, it's it's more than twice as much as what they'd be getting from a subdivision fund uh if you're a county. Um and so those are gonna have the strictest requirements, most controlling expenditures, you know, must be spent on remediation. Um, you said there's an urgency to spend these monies. Has any of this started?
SPEAKER_00Um, some of the counties have have spent some of their money, yes. Um, I know that I saw an article that Hamilton County um hired a data analyst to kind of take a look at, you know, their statistics where the money should be going, things like that, which is very appropriate. So some of the counties have started spending parts of their money, other counties are taking it slow and assembling task forces or committees that can do a needs assessment or get community input and decide where the money should go before they make any quick decisions and start spending. So a lot has not seemed to have won out yet. There is more of a planning phase type of landscape. Um, at the state level with the abatement council, the 70% of the full bucket, the part that's going to the grants, none of that money has gone out yet. Though they are waiting for the development of an electronic platform that will allow them to receive applications electronically, score those applications, and then make awards. That way they have a way to track everything, report on everything. Um, and that's taking a little longer than they were expecting. So they've sent the sent the 31 million initial payments out to the counties. The counties have spent some of that. The bulk of the money is still there waiting um for the proper process for them to be able to distribute it.
SPEAKER_01Well, that does sound frustrating for the council, if not the the individuals who want to apply for these these funds. I know a lot of nonprofits are talking about what uh what's the application process? When can we apply? Uh, do we know any of that information?
SPEAKER_00So they were hoping to open for applications July 5th, um, but they were also hoping that platform would be developed and it it is not. So right now they are estimating fall of this year they will be able to accept applications. Their next meeting is scheduled for June 23rd. So hopefully we will have some updates about the timeline at that time. Um, but as of right now, the process, the application process itself has been established. So the criteria, um, you know, how they're going to score the applications, that type of thing, that's been determined. They're ready to go. They're just waiting for the actual platform to be able to accept those applications. And yes, they are, some of them seem to be somewhat frustrated with that, especially Dr. Stephen Lloyd. You know, he wants to get this money out because people are dying. And that's completely understandable. But again, if you don't do it correctly, if you can't track it, if you can't report it, if you don't know where it's going, if you aren't making sure you're doing it correctly, there could be a lot of problems on the back end. So as painful as it is to sit and wait, the best thing to do is sit and wait.
SPEAKER_01Right. Measure twice, cut once. Yeah, that does make sense. And and and some money is going out, like you said, uh to counties and and so so some stuff is starting to move. So that's good. Um, can you tell us a bit about the application parameters? Uh, what should a coalition, for example, expect uh to shape their application around?
SPEAKER_00Sure. So if anyone's has experience with grant writing and submission and management and all of that, they will be very pleased with the process. You know, the people on the council have full-time jobs. They aren't, you know, grant reviewers. So they're trying to keep it as simple as possible, but still make sure that they distribute this money in the most impactful way. So what they've done, the application itself will be pretty short. I think it's 2,000 or 2,500 words somewhere in their total, which is very short for a grant application. Um, but they develop seven criteria that they'll use to score the applications. Um, those criteria are impact, innovation, integration, evidence base, feasibility, sustainability, and credibility. Um, and those will be broken down into sections. And then, of course, you'll have to have a budget. And um, these are going to be three-year, three-year terms. So you can apply for up to three years, submit those, you know, um, submit a response for those seven criteria and a budget. And then they'll score them. The um each one of those is weighted a little bit differently, but they'll score those and then um they'll have subcommittees that will review the applications, score them, bring the bring the ones that they recommend to the full committee, and then they'll have discussion and voting.
SPEAKER_01So wow, that yeah, that does sound like a much better uh or let's say a less of a headache than going after um, say a federal grant that might be up to 80 pages. Um now, I uh as you said, grant writers might be familiar with certain aspects of this for sure, sustainability, feasibility. These are pretty common things on grant applications, but uh integration and innovation, that's pretty interesting to me. I I know some some grants do talk about innovation, but uh, can you talk a little bit more about what integration looks like?
SPEAKER_00Yeah, integration is basically um the way they're describing it. How does the proposed program fit within the existing ecology of prevention and care? So basically incorporation, collaboration with community resources, um, you know, not duplicating treatment or recovery resources, but instead integrating and collaborating.
SPEAKER_01This is a lot of money they're talking about. Are they prioritizing any type of strategy over the other?
SPEAKER_00Um, not really. They're all important, right? All of the strategies are very important. What they have done is kind of done some soft allocations as far as the percentage of the overall total that they'll be giving for each strategy. How they've broken that down, and again, these are these are soft allocations, um, but 15% to primary prevention, 10% to harm reduction, 40% to treatment, 20% to recovery support, 10% to education and training, and 5% for research and evaluation.
SPEAKER_01And wow, okay, that while that does sound like a huge disparity, I think it's worth pointing out that the 40% to treatment, a lot of that just comes from the fact that treatment is so expensive.
SPEAKER_00Oh, absolutely. Treatment is is the most expensive. Of course, we know you're gonna get your biggest return on investment with primary prevention. So we always push prevention and um advocate for that, but we still have to treat the people that need treatment right now, and it is terribly expensive. So um close to half will it will be allocated for treatment.
SPEAKER_01Not to mention that so many people lack insurance altogether, making uh treatment costs even higher. Uh with all of this in mind, are there any uh additional funds on the way?
SPEAKER_00There are actually just as of a couple days ago, the sign-on period has closed. But yes, there's a second wave of settlements. Um, so those are going to total about$490 million. The subdivision sign-on, so that's any city or counties that wanted to sign on. Um, that was to be done by April 18th, which was very recent. Um, it's my understanding that the state of Tennessee did reach critical mass, which means enough subdivisions signed on that they will move forward with these litigations. Um, so and those are distributors and pharmacies. So it was Allergan Tiva, CBS, Walgreens, and Walmart. And of course, those will be paid in multiple terms. So, like Walmart wants to maybe pay theirs all up front in one year. The others want to spread it out over different periods of time. So we don't yet know what will be coming in when, but we do know that it will be about$490 million again over the next 10 to 15 years.
SPEAKER_01So that's like an additional two-thirds of what we're already getting. So that's$490 million is not nothing. And especially when we're already getting a little over 600 million. So that that's that's not an insignificant chunk of change.
SPEAKER_00No, I mean, that's over right, that's over a billion dollars. So even if we're using, you know, a good 70% of that for future remediation purposes, um, it it's a lot of money. Will it fix everything? Absolutely not. I don't think there's any amount of money that can get us to a place to completely, completely overcome the consequences of this. But a billion dollars will certainly help.
SPEAKER_01Yeah, and that's just for Tennessee. Uh, you did mention um the different timelines and different amounts for all these different companies. I mean, that that's a lot to keep track of. Is are are are we going to be distributing that in the same way with the 15, 1570 split?
SPEAKER_00Oh, that's a great question. Yes, absolutely. So there was legislation introduced this session that would amend the previous legislation. And basically what that does is um it allows the second wave of money to be subjected to the same rules as the first wave and also distributed in the same way. So it would just kind of whatever comes in would everything would fall into the same buckets of money and be distributed the same, same reporting requirements and everything.
SPEAKER_01Okay. So a billion dollars coming in. We've got these buckets of money set aside. We know all about the the grant funded portion, the the most of the opioid abatement counts, although the the that people can apply for grants. Uh, but the stuff going directly to counties, the stuff going to subdivisions, I would imagine there's some differences there. For example, you know, these counties have very different sizes, different death rates, everything. How did they determine the amounts going to all of these different counties and subdivisions?
SPEAKER_00Well, uh, it's complicated and it's different for each one. So the subdivision funds that's going directly from Brown Greer to the subdivisions, those allocation percentages were set in these settlements. They will not change over the 18 years as the money comes in. Um, those are set. They're small percentages. They were based on population and then, you know, overdose statistics and things like that. The funds that are coming through the abatement council through Edison to the counties, those were calculated a little bit differently. And those will change over time, just to think make things more complicated. But, you know, that's that seems to be a fair process. Um, what they did was they took four data points and they calculated them together and it came up with an allocation percentage. So, and they're weighted differently. So fatal and non-fatal overdoses were both weighted at 12.5%. They used three-year data from the Tennessee Department of Health, estimated those three years, weighted it at 12.5% for fatal, 12.9%, 12.5% for non-fatal overdoses. Then they took opioid prescription rates measured in morphine milli equivalents, three years again, Tennessee Department of Health data, they weighted that at 25%. Then they took the population, and for the initial allocations, they used the 2020 US Census data, but that was weighted at 50%. So they calculate all that together and they come up with an allocation percentage per county. But because these statistics change over time, they will be recalculating these um allocation percentages every four years. So prior to every fourth payment going out, they will recalculate these. Um, so prior to the 2027 payment, these will be recalculated. So if your statistics are improving, you may get less money in the next round of payments. So we are encouraging counties to keep that in mind. Um, it's very hard to calculate estimated payments over this 18-year period because, well, one thing, some of these companies could go bankrupt. And then are we going to get our payments? You know, so we have to rely on actually getting this money to estimate payments over time. And then another thing that makes it difficult is that these allocations will be recalculated. So there could be a change every four years in the amount that's coming in. So we encourage people to keep that in mind. Another very important thing, um, because it's possible that the data might not represent the scope of the problem in very small counties. So when you take small counties with a small population and very small numbers of overdoses and you you put them into these calculations, it may not very well represent the scope of the problem. And that is something that has been considered. So what they're doing every four years when they recalculate these allocations, 2% of that total bucket of county abatement money will be held back. And it will be held back in case a small county or well, really any county, in case a county feels that their allocation percentage isn't representative of what's happening in their county, they can go and say, hey, we feel like this isn't representative. We would like to take another look at this. We have some data to support it. And then 2% of that holdback might be able to go to that county. The county, when the allocations are made, they will be sent out to the counties. And the counties will have 30 days to either say, yes, fine, we agree with this allocation, or no, we feel like this doesn't represent us well. We want to take another look and possibly get part of that 2% holdback. If they don't do that within the 30 days, that 2% holdback just goes right back into the pot of money and it's distributed out to the counties.
SPEAKER_01Well, it does make a lot of sense to have something like that. Uh, you know, you said population is weighted at 50%. Uh, that's that's a pretty huge factor there. So it sounds like that's going to be the most significant in terms of just the statistics of it all. Uh, but the other things you're talking about, uh prescription rates, well, that you know, that that doesn't measure heroin or fentanyl uh that's bought illicitly on the streets. And then there's overdoses. Um, there's a lot of concern that these are underreported. So so it it does, it it's good that that counties have leeway to be able to get a little bit of a boost there. And of course, the the recalculation, like like you said, it actually makes a certain amount of sense if a county is experiencing a worsening of a situation. They have an opportunity to get more money just by the numbers alone. And if they're getting better, then they might have to uh share a little bit more with their neighbors that are that are still struggling badly. And of course, I guess a lot of these counties are is, you know, actually, this is a good segue. Are any counties talking about working together, um, pooling funds in any way?
SPEAKER_00Some counties have. When we've had some conversations with some counties that are interested in possibly, you know, these smaller counties that aren't getting a lot of money, you know, if you're getting$30,000 a year, um can't do a whole lot with$30,000 a year. But if you could work, like you said, with your neighbors and maybe pool some of your money and share resources, that might be a possibility. Um, so yes, absolutely. There has been some talk about that. Um, I know Northwest Tennessee's had some conversations. The region surrounding Knox has had some conversations about that. I think if you get too many, too many neighbors involved, things can get complicated quickly. I think if you stick with neighboring counties or, you know, the same judicial district, something that you have in common, I think will make it a little bit easier. Um, but absolutely, you know, combining resources would be a very good way to go with this.
SPEAKER_01And I guess an important thing to consider is then is not only are the metrics and the amount of the cash changing uh every few years, so are the elected representatives and they might want to change a deal. So uh that makes sense. You don't want to add too many additional variables on top of that.
SPEAKER_00Absolutely. That's an excellent point. Um, another thing we are encouraging people to do is see if you can use the abatement funds that you're getting um to leverage additional funds. You know, can you use your 50 grand a year that you're getting for a cost match grant through ARC or through the state? Or, you know, can using money to leverage money to equal more money is definitely a good way to expand programs and enhance resources without having to, you know, come up with that cost match yourself through the county. So we are encouraging people to do that as well.
SPEAKER_01Yeah, that makes sense. That's a and that's that's one of the best, most reliable strategies in the grant writing world, anyway, is is part of that sustainability is can you diversify uh your revenue stream? So that that's excellent advice. You've answered a lot of really important questions here. Um and uh is there any is there any place people can go if they want to learn a little bit more about all this?
SPEAKER_00Absolutely. The uh state attorney general's website has a lot of resources. Some of the documents can be very long and difficult to read, um, but they do have a they put kind of a guide together. It's still pretty long, but it explains everything in one place. So I would recommend looking at that. The Opioid Abatement Council, they open their meetings up to the public. So you are welcome to go to their meetings. They do stream them live. You're welcome to join their meetings virtually. They also post the um recordings of their meetings on their website. So you're welcome to watch those at any time. So the Opioid Abatement Council website has all of those videos. They post their meetings ahead of time. They also have the approved remediation list. So if you're curious about, you know, does this intervention fit within what they have approved, you can absolutely go and look at that. Happy to reach out to us at any time. Um, we're happy to help any answer any questions. Um, there's still a lot of unknowns. There are some very that, you know, things we didn't talk about today that are really in the weeds, especially at the city and county level. Um, so there's still, we haven't done this before. It's brand new. And so we're still working through some things. When I say we, I just mean everybody in general. Um, and still finding the answers to some of the questions. So I encourage people to be patient, let everybody figure out how they're gonna manage all of this and get all of the answers to make sure that they do it correctly. Um, but there are a lot of resources out there.
SPEAKER_01In addition to this episode, is there anything else uh SMART is planning on doing relating to this?
SPEAKER_00We are going to hire um what we're calling substance use consultants, one in each grand division of the state, just to help cities and counties navigate some of this, uh, whether it's help, you know, put together a task force, complete a needs assessment, educate the community, um, start programs, evaluate programs, you know, figure out the accounting piece of it, whatever we can do, and not just specific to opioid settlements, but anything related to substance use in general. So we plan to have those positions um hired and started about mid-July. So at that point, we'll have more capacity to be able to work directly with cities and counties.
SPEAKER_01Just in time, hopefully, for uh the uh abatement council to have their applications online.
SPEAKER_00Exactly.
SPEAKER_01Thank you very much, uh, Dr. Torval. I appreciate this, and I hope this was an enlightening episode for people who want to know more about how this money is going to be spent.
SPEAKER_00Thank you for having me. It was a pleasure.
SPEAKER_01For more episodes on in-depth discussions on Tennessee policies related to substance use disorder by a range of local experts. Please subscribe to us wherever you get podcasts and visit our website at smart.tennessee.edu. I'm Jeremy Corvellis. Thank you for listening. See you next month.