TO:
Honorable Mayor and Members of the City Council
THROUGH:
Bruce Moe, City Manager
FROM:
Quinn Barrow, City Attorney
George Gabriel, Assistant to the City Manager
SUBJECT:Title
Consideration of a Resolution Opting In and Authorizing Settlement Agreements with Manufacturers Teva and Allergan and Chain Pharmacies CVS, Walgreens, and Walmart and Authorize City Manager to Participate in Future Opioid Settlement Agreements (City Attorney Barrow).
ADOPT RESOLUTION NO. 23-0039
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council:
1. Adopt Resolution No. 23-0039 opting in and authorizing settlement agreements with manufacturers Teva and Allergan and chain pharmacies CVS, Walgreens, and Walmart; and
2. Authorize the City Manager to participate in future opioid settlement agreements.
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FISCAL IMPLICATIONS:
Following settlement agreements the City Council previously authorized the City Manager to join, the City has received $59,271.35 from various opioid manufacturers. The amount Manhattan Beach could receive over the course of 18 years is estimated at $500,000 based upon a complicated allocation formula.
Should City Council adopt the proposed resolution opting into additional settlement agreements the City will receive additional funding, though the final figure is yet to be determined. However, the settlement administrator has indicated that the State of California may receive up to an additional $1.8 billion dollars. The City of Manhattan Beach’s allocation will vary upon a formula and how many other cities join the settlement agreements.
BACKGROUND:
States and cities across the United States have filed thousands of lawsuits against companies involved in marketing, manufacturing, or distributing opioids to recover costs associated with the opioid overdose epidemic. Some of these lawsuits have led to nationwide settlement agreements with payouts to states and local political subdivisions for the purpose of funding opioid abatement activities. The Distributors Agreement and the Janssen Agreement (“2021 National Settlements”) were the first two in which the City had the option of participating.
At the December 7, 2021, meeting, City Council adopted Resolution No. 21-0114 authorizing the City Manager to execute all necessary documents to approve the proposed settlements agreements with Distributors of Opioids, AmerisourceBergan, Cardinal Health, and McKesson, and Opioid Manufacturer Janssen, owned by Johnson & Johnson.
DISCUSSION:
Additional nationwide settlements were reached to resolve all opioid litigation with three pharmacy chains-CVS, Walgreens, and Walmart-and two additional manufacturers-Allergen and Teva- in late 2022. As with the 2021 National Settlements (Distributors and Jansen), states and localities that wish to participate in the 2022 National Settlements need to “opt in.” The City must opt into the settlements by April 18, 2023, which requires the City to release its claims against the five aforementioned companies. If the City takes no action, it will result in opting out of the settlements and the City’s designated funds will go toward the State’s settlement allocation. The City would still have the opportunity to bring its own action.
Staff is still evaluating the allowable uses of settlement funds, reporting requirements, and potential distribution amounts, and has agendized a discussion at the May 16, 2023, City Council meeting to discuss allocation options for these funds.
The State of California has joined additional lawsuits against manufacturers, distributors, and other entities responsible for aiding the opioid epidemic and anticipates receiving funds from future opioid judgment and settlement agreements (Attachment 2). As a result, the City anticipates evaluating additional settlement agreements to join into the foreseeable future. Knowing this, staff recommends that Council allow the City Manager discretion to enter into additional opioid settlement agreements on the behalf of the City.
CONCLUSION:
Staff recommends that the City Council:
1. Adopt Resolution No. 23-0039 opting in and authorizing settlement agreements with manufacturers Teva and Allergan and chain pharmacies CVS, Walgreens, and Walmart;
2. Authorize the City Manager to participate in future opioid settlement agreements.
LEGAL REVIEW:
The City Attorney has approved the resolution as to form.
ATTACHMENTS:
1. Resolution No. 23-0039
2. Executive Summary - National Opioids Settlement
3. Staff Report - December 7, 2021