As you may have heard, Tennessee has joined a broad coalition of states and and other political subdivisions in reaching a $26 billion settlement with four companies to resolve legal claims for their role in the opioid crisis. Tennessee’s share of the settlement funds is expected to exceed $600 million over 18 years. The settlement consists of two agreements. One agreement is with the three major pharmaceutical distributors: AmerisourceBergen Corporation, Cardinal Health, Inc., and McKesson Corporation. The second agreement is with an opioid manufacturer: Janssen, a subsidiary of Johnson & Johnson.
To become effective, a critical mass of states and political subdivisions must agree to participate in the settlements. Tennessee has joined a substantial majority of states in agreeing to participate, and the companies have determined that there is sufficient state joinder to move forward with the political subdivision sign-on period. As part of the settlement agreement, political subdivisions (counties, cities, etc.) will have until January 2, 2022 to become initial participating subdivisions.
In addition to the two settlement agreements, subdivisions are encouraged to join the Tennessee State-Subdivision Opioid Abatement Agreement. This Tennessee-specific agreement, negotiated with representatives of the state’s subdivisions, addresses the allocation provisions in the two settlements and sets out a structure for the distribution of abatement funds from pending bankruptcy plans. If the settlements become effective, Tennessee will be eligible to receive more than $613 million over 18 years, with these maximum payments dependent on all settlement incentives being reached. Payments could begin as soon as April 2022. Most funds will be dedicated to future opioid abatement and remediation programs, benefiting all regions of the state. The allocation and use of funds from these settlements are controlled by the settlement agreements, recent legislation, and the proposed Tennessee State-Subdivision Opioid Abatement Agreement.
Under the agreements, certain municipalities are eligible to receive direct settlement payments in addition to benefiting from programs funded by their counties and the independent Tennessee Opioid Abatement Council. Those eligible are municipalities (of any size) that are litigating against these companies and all other municipalities with populations of 30,000 or greater. (“Direct Payment Municipalities”). If maximum payments are earned, up to $92 million of the settlement funds would be paid directly to Tennessee counties and the Direct Payment Municipalities from the Subdivision Fund. The State of Tennessee is committed to maximizing the payments from these settlements, which are highly incentive-based and contain several potential penalties and offsets. Close to full subdivision joinder is anticipated, which would earn most incentives. Additionally, the recent legislation also allows for the release of all state and subdivision claims against these companies if the settlements become effective and this process should ensure maximum payments.
Not only does joinder help reach the critical mass of subdivision participation needed for the settlements to become effective, but it also makes each municipality eligible for its maximum payments. Joinder by the deadline protects against the risk of missing initial payments or having all payments reduced because of a failure to join before the statutory release of claims is implemented.
This proposed resolution authorizes the Mayor to execute necessary documents so that the City can join the State of Tennessee and other local governments as participants in the Tennessee state-subdivision opioid agreement. The resolution also authorizes the Mayor to execute any formal agreement and related documents evidencing the City of Brentwood's agreement to the settlement of claims and litigation specifically related to AmerisourceBergen Corporation, Cardinal Health, Inc, McKesson Corporation, Janssen Pharmaceuticals, Inc, and Johnson & Johnson.
Please contact the City Attorney with any questions.
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