"We really are wasting this opportunity to use these funds to turn the epidemic around."
The vast sums generated from settlements with companies accused of aggressively marketing prescription opioids are proving to be a complex financial landscape, with addiction treatment providers, emerging industries, and strained government budgets all vying for a piece of the nearly $58 billion pie. However, concerns are mounting that these crucial funds, intended to address the devastating opioid crisis, are being diverted towards questionable expenditures, leaving those most affected by the epidemic feeling betrayed and overlooked.
The settlement agreements, designed to compensate for the immense societal damage caused by the opioid crisis, have allocated a significant portion of their funds—nearly half—to local governments. The rationale behind this distribution model is that local officials possess the most intimate understanding of their communities’ needs and can therefore ensure the judicious allocation of these resources, often referred to as "blood money" by those who have suffered profound loss due to opioid addiction. Yet, a critical gap exists: many local leaders lack specialized training in addiction policy and may operate with under-resourced public health departments, hindering their ability to effectively manage and direct these substantial payouts.
This deficiency has, in many instances, led to spending decisions that clinicians, researchers, and addiction recovery advocates argue are unlikely to yield tangible improvements in treating substance use disorders or saving lives. In New York, for example, where approximately 46% of opioid settlement funds are directly managed at the local level, public records reveal expenditures on items such as surveillance cameras, advanced data extraction technology for law enforcement, and even goggles simulating intoxication. While these purchases may be legally permissible under broad interpretations of settlement guidelines, they are widely perceived as a profound disservice to individuals struggling with addiction and their families, failing to address the core issues driving the crisis.
Jasmine Budnella, director of drug policy at VOCAL-NY, an advocacy organization dedicated to supporting those impacted by the opioid crisis, has observed this trend firsthand. She notes that without robust oversight, local governments are susceptible to "going rogue" with these funds. When advocates and families of overdose victims attempt to raise concerns with state agencies that could potentially hold localities accountable, they often encounter a frustrating cycle of inter-agency deflection. "It feels like the Spider-Man meme, where it’s like everybody’s pointing at each other," Budnella explained, emphasizing the urgent need for a clear authority to intervene when funds are mismanaged. "Somebody needs to be able to have the stick and slam their hand on the table and be like, ‘You’re doing this wrong and this is the consequence.’"
The experiences in New York serve as a potent illustration of a nationwide challenge: the fragmentation of oversight and the diversion of critical settlement funds into various interests, often at the expense of effective addiction remediation. Extensive data compiled by KFF Health News, in collaboration with the Johns Hopkins Bloomberg School of Public Health and the addiction nonprofit Shatterproof, has documented similar patterns across the country. These reports highlight the allocation of settlement money towards law enforcement equipment, such as night-vision goggles and bulletproof vests, unproven and even whimsical prevention initiatives like drug-awareness magicians for children, and the disheartening use of funds to simply plug budget deficits.
The question of who bears the ultimate responsibility for ensuring these expenditures align with the intent of the settlements remains largely unanswered. The federal government, which played a minimal role in the litigation that generated these funds, has largely abstained from active oversight. Advocates and grieving families, while powerful in their advocacy, possess limited enforcement authority. While a few states have enacted new legislation to address the issue, the pace of change is slow and inconsistent, creating a patchwork of accountability mechanisms.
The settlement agreements themselves mandate that the majority of funds be dedicated to "opioid remediation," a broad term encompassing over 100 suggested expenditures. However, the expansive nature of this list, coupled with the designation of some funds as "unrestricted" in many states, including New York, opens the door to broad interpretation and, consequently, potential misuse. This situation is exacerbated by ongoing federal budget cuts that have threatened addiction-related services, thereby increasing the demand for funding, even as overdose deaths, though showing a slight decrease from their 2022 peak, continue to claim approximately 186 lives daily.
Alexis Pleus, whose son Jeff Dugon died of a heroin overdose in 2014, embodies the profound frustration felt by many. "We really are wasting this opportunity to use these funds to turn the epidemic around," she stated, her voice tinged with the enduring pain of her loss. Pleus, who now runs a nonprofit that receives opioid settlement funds for drug users and family support groups, believes that if the money could prevent other families from enduring similar heartache, it would offer some solace. "We need oversight," she asserted, underscoring the critical need for accountability.
In New York, the responsibility for oversight is ostensibly divided among three key entities: the Office of Addiction Services and Supports (OASAS), the Attorney General’s office, and the Comptroller’s office. OASAS is designated as the "lead state agency" responsible for distributing a portion of settlement dollars through grants, informed by the recommendations of the state’s Opioid Settlement Fund Advisory Board. The agency also holds the power to conduct oversight and audits, with the potential to withhold future funds from non-compliant local governments. However, OASAS has yet to exercise this punitive power, and its auditing practices have been criticized for focusing narrowly on reporting and recordkeeping rather than the appropriateness of expenditures.
Agency spokesperson Jerry Gretzinger affirmed that OASAS is committed to ensuring responsible and strategic use of these funds. The office is currently auditing 19 local governments for compliance with reporting requirements, but this process does not extend to a comprehensive review of whether the money was spent on appropriate uses, a concern voiced by many advocates. Christine Khaikin, a deputy director at the Legal Action Center, which has been instrumental in uncovering questionable local spending, expressed her dissatisfaction, stating, "That doesn’t feel like oversight." Even members of the state’s Opioid Settlement Fund Advisory Board have urged OASAS to provide more data and evaluation of fund utilization, but agency officials have maintained a stance of limited direct control over funds allocated to counties and cities.
The Attorney General’s office, led by Letitia James, has been a prominent national figure in prosecuting pharmaceutical companies responsible for the opioid crisis and has frequently highlighted its role in securing billions in settlement funds. However, when questioned about the office’s responsibility in ensuring the proper expenditure of these funds, its response has been to defer to other agencies. Spokesperson Grant Fox stated, "While our partners in state and local governments distribute and oversee these funds, we will continue our work to hold accountable the companies responsible for fueling the spread of addictions and overdoses." This stance has drawn criticism from state senators, advisory board members, and advocates who believe the Attorney General’s office should play a more active enforcement role, given its pivotal role in securing the funds.
In contrast, Attorneys General in Michigan and Kansas have proactively issued guidance detailing prohibited expenditures, including many law enforcement-related purchases that have raised red flags for New York advocates. The New York Attorney General’s office did not respond to inquiries about whether it would consider adopting a similar approach.
The role of the State Comptroller, as a fiscal watchdog, has also been suggested as a potential avenue for enhanced oversight. The Reason Foundation has proposed model legislation that would mandate independent financial reviews and transaction testing for recipients of significant settlement amounts, aiming to ensure funds are used for their intended purposes. While no state has yet adopted this model law, New York Comptroller Thomas DiNapoli’s office confirmed it is conducting an audit of OASAS’s oversight of opioid settlement money, encompassing both state and local funds. The findings of this audit are expected to inform any future enforcement actions. This initiative follows similar actions taken by comptrollers and auditors in New Jersey, Missouri, and Nashville, Tennessee.
Despite these nascent steps towards greater accountability, the challenges are considerable. Advocates like Layal Bou Harfouch, a co-author of the Reason Foundation’s model law, express concern over past instances of settlement funds being used for seemingly frivolous purposes, such as concerts and police shooting ranges. "If we can prevent that at least a little and have these funds be a bit more focused, I don’t think it’s too late," she commented, highlighting the ongoing need for vigilance and strategic allocation of these critical resources for the next decade and beyond. The potential for misuse, coupled with the persistent toll of the opioid crisis, underscores the urgent necessity for robust oversight and a unified commitment to ensuring these settlement billions fulfill their promise of remediation and recovery.
