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Special Reports > Features


'THEY SEE A CASH COW': CORPORATIONS COULD CONSUME $50 BILLION OF OPIOID
SETTLEMENTS


— PITCHES LAND DAILY IN THE INBOXES OF STATE AND LOCAL OFFICIALS

by Aneri Pattani, KFF Health News January 1, 2024


MedpageToday

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The marketing pitches are bold and arriving fast: Invest opioid settlement
dollars in a lasso-like device to help police detain people without Tasers or
pepper spray. Pour money into psychedelics, electrical stimulation devices, and
other experimental treatments for addiction. Fund research into new, supposedly
abuse-deterrent opioids and splurge on expensive, brand-name naloxone (Narcan).

These pitches land daily in the inboxes of state and local officials in charge
of distributing more than $50 billionopens in a new tab or window from
settlements in opioid lawsuits.



The money is coming from an array of companies that made, sold, or distributed
prescription painkillers, including Johnson & Johnson, AmerisourceBergen, and
Walgreens. Thousands of state and local governments sued the companies for
aggressively promoting and distributing opioid medications, fueling an epidemic
that progressed to heroin and fentanyl and has killed more than half a million
Americansopens in a new tab or window. The settlement money, arriving over
nearly two decades, is meant to remediate the effects of that corporate
behavior.

But as the dollars land in government coffers -- more than $4.3 billionopens in
a new tab or window as of early November -- a swarm of private, public,
nonprofit, and for-profit entities are eyeing the gold rush. Some people fear
that corporations, in particular -- with their flashy products, robust marketing
budgets, and hunger for profits -- will now gobble up the windfall meant to
rectify it.

"They see a cash cow," said J.K. Costelloopens in a new tab or window, MD, MPH,
director of behavioral health consulting for the Steadman Group, a firm that is
being paid to help local governments administer the settlements in Colorado,
Kansas, Oregon, and Virginia. "Everyone is interested."



Costello receives multiple emails a week from businesses and nonprofits seeking
guidance on how to apply for the funds. To keep up with the influx, he has
developed a standard response: Thanks, but we can't respond to individual
requests, so here's a link to your locality's website, public meeting schedule,
or application portal.

KFF Health News obtained email records in eight states that show health
departments, sheriffs' offices, and councils overseeing settlement fundsopens in
a new tab or window are receiving a similar deluge of messages. In the emails,
marketing specialists offer phone calls, informational presentations, and
meetings with their companies.

Alabama Attorney General Steve Marshall recently sent a letteropens in a new tab
or window reminding local officials to vet organizations that reach out. "I am
sure that many of you have already been approached by a variety of vendors
seeking funding for opioid initiatives," he wrote. "Please proceed with
caution."


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Of course, not all marketing efforts should prompt concern. Emails and calls are
one way people in power learn about innovative products and services. The
country's addiction crisis is too large for the public sector to tame alone, and
many stakeholders agree that partnering with industry is crucial. After all,
pharmaceutical companies manufacture medications to treat opioid addiction.
Corporations run treatment facilities and telehealth services.



"It's unrealistic and even harmful to say we don't want any money going to any
private companies," said Kristen Pendergrassopens in a new tab or window, vice
president of state policy at Shatterproof, a national nonprofit focused on
addiction.

The key, agree public health and policy experts, is to critically evaluate
products or services to see if they are necessary, evidence-based, and
sustainable -- instead of flocking to companies with the best marketing.

Otherwise, "you end up with lots of shiny objects," Costello said.

And, ultimately, failure to do due diligence could leave some jurisdictions
holding an empty bag.

Take North Carolina. In 2022, state lawmakers allotted $1.85 million of
settlement funds for a pilot project using the first FDA-approved app for opioid
use disorderopens in a new tab or window, developed by Pear Therapeutics. There
were high hopes the app would help people stay in treatment longer.

But less than a year later, Pear Therapeutics filed for bankruptcyopens in a new
tab or window.



The state hadn't paid the company yet, so the money isn't lost, according to the
North Carolina Department of Health and Human Services. But the department and
lawmakers have not decided what to do with those dollars next.

$1 Million for Drug Disposal Pouches

Jason Sundbyopens in a new tab or window, CEO of Verde Environmental
Technologies, said the Deterra pouches his company sells are a low-cost way to
prevent expensive addictions.

Customers place their unused medications in a Deterra pouch and add water,
deactivating the drugs before tossing them, ensuring they cannot be used even if
fished out of the trash. A medium Deterra pouch costs $3.89 and holds 45 pills.

The goal is to "get these drugs out of people's homes before they can be
misused, diverted, and people start down the path of needing treatment or
naloxone or emergency room visits," Sundby said.

Sundby's company ran an ad about spending settlement dollars on its product in a
National Association of Counties newsletteropens in a new tab or window and
featured similar informationopens in a new tab or window online.



It may be paying off, as Deterra is set to receive $1 million in settlement
funds from the health department in Delaware County, Pennsylvaniaopens in a new
tab or window, and $12,000 from the sheriff's office in Henry County, Iowaopens
in a new tab or window. The company also has partnerships with St. Croix and
Milwaukee counties in Wisconsin, and is working on a deal in Connecticut.

Several other companies with similar products have also used their product
sitesopens in a new tab or window to urge jurisdictions to consider the
settlements as a funding stream -- and they're seeing early success.

DisposeRx makes a drug deactivation product -- its version costs about a dollar
each -- and received $144,000 in South Carolina for mailing 134,000 disposal
packets to a program that educated high school football players, coaches, and
parentsopens in a new tab or window about addiction.

SafeRx makes $3 pill bottles with a locking code to store medications and was
awarded $189,000 by South Carolina's opioid settlement council to work with the
Greenville County Sheriff's Office and local prevention groups. It also won
smaller awards from Weld and Custer counties in Colorado.



None of the companies said they are dependent on opioid settlements to sustain
their business long-term. But the funds provide a temporary boost. In a 2022
presentationopens in a new tab or window to prospective investors, SafeRx called
the opioid settlements a "growth catalyst."

Critics of such investments say the products are not worthwhile. Today's crisis
of fatal overdoses is largely driven by illicit fentanylopens in a new tab or
window. Even if studiesopens in a new tab or window suggestopens in a new tab or
window the companies' products make people more likely to safely storeopens in a
new tab or window and dispose ofopens in a new tab or window medications, that's
unlikely to stem the record levels of deaths seen in recent years.

"The plausible mechanism by which they would even be able to reduce overdose is
a mystery because prescription medications are not driving overdose," said
Tricia Christensenopens in a new tab or window, policy director with the
nonprofit Community Education Group, which is tracking settlement spendingopens
in a new tab or window across Appalachia.

Safe storage and disposal can be accomplished with a locking cabinet and toilet,
she said. The FDA lists opioids on its flush listopens in a new tab or window
for disposal and saysopens in a new tab or window there is no evidenceopens in a
new tab or window that low levels of the medicines that end up in rivers harm
human health.



But Milton Cohenopens in a new tab or window, CEO of SafeRx's parent company,
Caring Closures International, said keeping prescription medicines secure
addresses the root of the epidemic. Fentanyl kills, but often where people
start, "where water is coming into the boat still, is the medicine cabinet," he
said. "We can bail all we want, but the right thing to do is to plug the hole
first."

Products to secure and dispose of drugs also provide an opportunity for
education and destigmatization, said Melissa Lyonopens in a new tab or window,
MPH, director of the Delaware County Health Department in Pennsylvania. The
county will be mailing Deterra pouches and postcards about preventing addiction
to three-quarters of its residents.

"The Deterra pouch is to me a direct correlation" to the overprescribing that
came from pharmaceutical companies' aggressive marketing, she added. Since the
settlement money is to compensate for that, "this is a good use of the funds."

Tools for Law Enforcement That Superheroes Would Envy



Other businesses making pitches for settlement funds have a less clear
relationship to opioids.

Wrap Technologies creates tools for law enforcement to reduce lethal uses of
force. Its chief product, the BolaWrap, shoots a 7½-foot Kevlar tether more than
a dozen feet through the air until it wraps around a person's limbs or torso --
almost like Wonder Woman's Lasso of Truth.

Terry Nicholsopens in a new tab or window, director of business development for
the company, said the BolaWrap can be used as an alternative to Tasers or pepper
spray when officers need to detain someone experiencing a mental health crisis
or committing crimes related to their addiction, like burglary.

"If you want to be more humane in the way you treat people in substance use
disorder and crisis, this is an option," he said.

The company posts body camera footageopens in a new tab or window of officers
using BolaWrap on YouTube and says that out of 192 field reports of its use,
about 75% of situations were resolved without additional use of force.



When officers de-escalate situations, people are less likely to end up in jail,
Nichols said. And diverting people from the criminal justice system is among the
suggested investmentsopens in a new tab or window in opioid settlement
agreements.

That argument convinced the city of Brownwood, Texas, where Nichols was police
chief until 2019. It has spent about $15,000 of opioid settlement funds to buy
nine BolaWrap devices.

"Our goal is to avoid using force when a citizen is in need," said James Fuller,
assistant police chief in Brownwood. "If we're going to take someone to get
help, the last thing we want to do is poke holes in them with a Taser."

After Brownwood's purchase, Wrap Technologies issued a press releaseopens in a
new tab or window in which CEO Kevin Mullins encouraged more law enforcement
agencies to "take the opportunity afforded by the opioid settlement funds to
empower their officers." The company has also sent a two-page documentopens in a
new tab or window to police departments explaining how settlement funds can be
used to buy BolaWraps.



Language from that document appeared nearly word-for-word in a briefing
sheetopens in a new tab or window given to Brownwood City Council before the
BolaWrap purchase. The council voted unanimously in favor.

But the process hasn't been as smooth elsewhere. In Hawthorne, California, the
police department planned to buy 80 BolaWrap devices using opioid settlement
funds. It paid its first installment of about $25,000 in June. However, it was
later informed by the state Department of Health Care Services that the BolaWrap
is not an allowable use of these dollars.

"Bola Wraps will not be purchased with the Settlement Funds in the future,"
Hawthorne City Clerk Dayna Williams-Hunter wrote in an email.

Carolyn Williams, a member of the advocacy group Vocal-TXopens in a new tab or
window, said she doesn't see how the devices will address the overdose crisis in
Texas or elsewhere.

Her son Haison Akiem Williams dealt with mental health and addiction issues for
years. Without insurance, he couldn't afford rehab. When he sought case
management services, there was a 3-month wait, she said. Police charged him with
misdemeanors but never connected him to care, she said.



In February, he died of an overdoseopens in a new tab or window at age 47. His
mother misses how he used to make her laugh by calling her "Ms. Carol."

She wants settlement funds to support services she thinks could have kept him
alive: mental health treatment, case management, and housing. BolaWrap doesn't
make that list.

"It's heartbreaking to see what the government is doing with this money," she
said. "Putting it in places they really don't need it."

KFF Health Newsopens in a new tab or window is a national newsroom that produces
in-depth journalism about health issues and is one of the core operating
programs at KFF -- an independent source of health policy research, polling, and
journalism. Learn more about KFFopens in a new tab or window.

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