What Opioid Settlement Recipients Can Learn from Tobacco Settlement Spending

A number of recent lawsuits filed in response to increasing opioid use and overdose death rates in the United States have sought to hold opioid manufacturers and distributors accountable. The resulting settlements—sometimes collectively referred to as the National Opioid Settlements—will distribute at least $52 to $54 billion to state and local governments over the next 18 years or so. These funds are meant to be allocated in ways that will “abate opioid-related harms.” As states start spending their opioid settlement money, they have a perfect opportunity to reflect on past lessons and consider future actions.

While the context and outcomes of these settlements are specific, the concept itself has precedent in the tobacco Master Settlement Agreement (MSA). Lessons learned from the MSA experience can help states make better use of their opioid settlement money.

In the 1990s, the MSA called for tobacco companies to distribute billions of dollars annually to states, with the goal of reducing youth smoking and promoting public health. Today—roughly 25 years since disbursement began—states’ use of MSA dollars has become a point of contention, as much of the money is used to fill generic holes in state budgets. In an effort to avoid similar missteps with opioid settlement spending, the resolutions have come with some guardrails. Of particular import is the mandate that the majority of funds (about 70 percent across settlements) be allocated in targeted ways that directly relate to opioids. But this still leaves state and local governments with considerable discretion. Below, we highlight lessons from the tobacco MSA distribution and related ways in which state and local governments can optimize the lifesaving potential of these funds.

Fund Health Programs Broadly

Both the tobacco MSA and the opioid settlements are responses to public health catastrophes. However, the MSA did not require recipients to spend in ways that would rectify or reduce smoking-related health harms. In fact, in 2023, only 2.7 percent of MSA dollars went toward smoking prevention and cessation efforts.

In contrast, the opioid settlement agreements do incorporate some mandates and recommendations for states’ use of their opioid abatement money. According to Exhibit E of the main settlements, states must choose to fund at least one of nine core areas, from expanding access to the overdose reversal drug naloxone to improving access to evidence-based treatment. In addition, the settlement recommends that states consider funding additional treatment, prevention, and harm reduction programs and services in the community and for people who are incarcerated.

Focus on Harm Reduction

Exhibit E’s broad opioid-related spending recommendations are helpful, and evidence-based prevention and treatment are important targets. But while tobacco MSA funds are available for as long as companies sell cigarettes, opioid settlement funds are time-limited and heavily frontloaded, making it essential to optimize spending strategies from the start. Most communities should prioritize allocating money to harm reduction efforts for a number of reasons.

• First, the United States is in the midst of an overdose crisis (annual overdose deaths topped 112,000 in 2023), and harm reduction has the unique power to start saving lives immediately. When fully embraced, authorized by communities, and adequately funded, the approach can reduce opioid-related harms from infectious disease to overdose deaths at the population level. Research suggests communities can expect to see these benefits within a month of launching a program.
• Second, harm reduction is among the most cost-effective public health interventions we have in our toolkits. By providing people who use drugs with the knowledge and resources to make healthier decisions, states can prevent costly infectious diseases, injection-site complications, and more.
• Third, despite decades of evidence to support its efficacy, harm reduction remains grossly underfunded in the United States. Opioid settlement money has the potential to fill that funding gap at a time when substance use is especially dangerous.
• Finally, harm reduction addresses several additional recommendations contained in Exhibit E. On top of the immediate health and life benefits harm reduction interventions confer, such programs can also serve as a point of meaningful contact and connection for participants. The “meet them where they’re at” ethos and judgment-free support of wraparound services can foster and facilitate an array of positive changes—from reductions in chaotic drug use and criminal activity to increased engagement with treatment.

Don’t Fund Enforcement Efforts

Much as states have been criticized for spending MSA money to fill potholes or assist tobacco farmers, there is growing concern that opioid settlement funds are being used to support the war on drugs.

Although Exhibit E does not explicitly recommend that states invest opioid settlement money into law enforcement efforts, several states have done just that. Kansas has already allocated $110,000 to its Joint Fentanyl Impact Team to disrupt “fentanyl trafficking and distribution” and $186,000 to the state’s highway patrol to purchase fingerprinting and drug-testing technology. Other jurisdictions have funneled opioid settlement dollars to police departments for more general purposes like purchasing new vehicles or restraint devices. This spending approach is not necessarily surprising, as the United States government has taken a supply-oriented, enforcement-first approach to drug use for more than 50 years.

However, a growing body of evidence suggests that such approaches are ineffective at reducing drug use and overdose—especially in the current era, which is characterized by an ever-changing synthetic supply. In fact, drug seizures and the pressure of prohibition create harm by increasing supply potency and unpredictability, thereby driving up overdose risk. Furthermore, law enforcement agencies already have considerable funds to support their role in the war on drugs. The federal government alone allocates tens of billions of dollars annually to drug-related law enforcement and interdiction efforts. And in 2023, the Biden administration announced an additional $275 million largely targeting the trafficking and distribution of fentanyl and related substances.

Engage Local Experts (Not Politicians) in Decision-Making

The tobacco MSA relied on legislatures to decide how to allocate funds in their jurisdictions. Opioid settlement recipients have an opportunity to do better on this. Several states, regions, and localities have set up advisory committees made up of elected officials, substance use prevention and treatment specialists, harm reductionists, people with lived and living experience, and others. By relying on local voices with varied expertise related to opioid use, jurisdictions can adopt evidence-based best practices and decide how to apply them. This ensures that programming is locally relevant—a factor that increases both effectiveness and cost-effectiveness.

Because this approach is not mandated by the agreements, jurisdictions must take the initiative to ensure decision-makers represent their communities, including those who may be served by opioid abatement programming.

Establish Transparency and Accountability Benchmarks

The tobacco MSA had two unusual particulars that make it difficult to hold states accountable for using the funds to meet settlement goals: lack of spending oversight and a settlement structure that ensured that states benefited not from the cessation of cigarette smoking, but from its continuation.

While the opioid settlements do not face this exact dilemma, transparency and accountability remain a challenge as states slowly roll out their spending plans. Of the 46 states receiving settlement money, 16 have said they will publicly report 100 percent of their spending, 14 have promised partial transparency, and the remaining 16 have not agreed to report their use of settlement dollars at all.

Conclusion

The opioid settlements have the potential to inject considerable funds into services and programs that could have a positive impact on the lives of people who use drugs in the United States and improve public health more broadly. Used correctly, this money could reduce the uptake of illicit drugs, reduce the ongoing overdose crisis, and combat substance use disorder in communities and carceral settings. But for these settlement dollars to have the most beneficial impact, states must reflect on and learn from past lessons.