Title
Consider/Discuss/Act on a Resolution Authorizing the City of McKinney to Participate in the Proposed Opioids Settlement Agreement Regarding the State of Texas’ and Other Governmental Entities’ Litigation Against Kroger for Their Role in the National Opioid Crisis and Authorizing the City Manager to Execute Documents Related Thereto
Summary
COUNCIL GOAL: Operational Excellence
MEETING DATE: December 3, 2024
DEPARTMENT: City Manager’s Office
CONTACT: Paul G. Grimes, City Manager
RECOMMENDED CITY COUNCIL ACTION: Staff recommends approval of a resolution authorizing the City Manager to execute on behalf of the City settlement documentation relative to the State of Texas’ and other governmental entities’ litigation against Kroger for the marketing, sale and dispensing of opioids.
ITEM SUMMARY: At the present time, the amount of funds to be received by the City is unknown.
BACKGROUND INFORMATION: Several years ago, the State of Texas, along with a broad coalition of states and political subdivisions from across the country, sued three (3) major opioid distributors - McKesson, Cardinal Health and Amerisource Bergen-along with an opioid manufacturer, Johnson & Johnson - for their role in the national opioid crisis. Those manufacturers entered into a settlement agreement with the coalition of states and over governmental entities and upon the request and urging of the Office of the Texas Attorney General, most Texas local governments participated in the settlement. The City opted to participate in September 2021, with the funds required to be utilized for opioid remediation purposes.
Similarly, the State of Texas and other coalition members settled opioid cases against two pharmaceutical manufacturers, Teva and Allergan (“Manufacturers”), and three pharmacies, CVS, Walgreens, and Walmart (“Pharmacies”) relative to their respective roles in manufacturing, distributing, marketing, sale and dispensing of opioids, in the following amounts: Allergan-$135 million; CVS-$304 million; Walmart-$170 million; and Walgreens-$340 million. The City opted to participate in these settlements in April 2023, with the funds required to be utilized for opioid remediation purposes.
Now, the State of Texas has reached a settlement with Kroger. The proposed Settlement requires Kroger to pay $83 million (the “Settlement Amount”) to Texas and its political subdivisions. Of the Settlement Amount, the vast majority is earmarked for use by Texas and its subdivisions to remediate and abate the impacts of the opioid crisis. The Settlement also contains injunctive relief provisions governing the opioid marketing as well as the sale and dispensing practices at the heart of the opioid claims in the lawsuits.
The Office of the Attorney General strongly encourages Texas political subdivisions to participate in the settlement for the following reasons:
“First, the amounts to be paid under the Settlement, while insufficient to abate the epidemic fully, will contribute to allowing Texas and its local governments to commence with meaningful change designed to curb opioid addiction, overdose, and death, following on the Distributors and Johnson & Johnson/Janssen settlements from 2021, the Teva and Endo settlements from 2022, the Mallinckrodt bankruptcy settlement in 2023, and the Allergan, CVS, Walmart, and Walgreens settlements from 2023;
Second, time is of the essence. The opioid epidemic continues to devastate communities around the country, and it is critical that the funds begin to flow to allow governments to address the epidemic in their communities as soon as possible; and
Third, you know first-hand the effects of the opioid epidemic on your community. Funds from this settlement will be used to commence abatement of the crisis and provide relief to your citizens while litigation and settlement discussions proceed against numerous other defendants in the opioid industry.”
Settlement amounts will be based upon the number of participating governmental entities, and proceeds will be spent on additional opioid remediation. The amounts to be allocated to the City of McKinney is determined by the “Texas Term Sheet” that the City has already agreed to and adopted for this purpose. Detailed information about the State of Texas’ opioid litigation efforts may be found on the Texas Attorney General’s website.
FINANCIAL SUMMARY: N/A
BOARD OR COMMISSION RECOMMENDATION: N/A