What Will Happen to the Billions Obtained From Opioid Drug Lawsuits?

By Wolfgang Vogel — Oct 30, 2019
ACSH advisor Dr. Wolfgang Vogel was not pleased about how the 1998 settlement money between the tobacco industry and state governments was spent. Little of the $246 billion actually went to smoking cessation programs. Will we see the same irresponsible use of funds obtained from lawsuits against opioid makers?
There it goes again. Image: NeedPix

As everyone knows, local and state governments are suing the pharmaceutical companies purportedly so that the epidemic these companies started can be finally ended, Also, the companies will have to pay for past damages done and – most of all – will provide money to help and rehabilitate the poor and helpless addicts.

What is not mentioned in these lawsuits (or in the press) is the fact that by punishing and jailing addicts governments played a much greater role in the current crisis than the pharmaceutical companies. It has been known for almost 100 years banning drugs and alcohol are both very costly and ineffective while governments neglect rehabilitation, which is less costly and much more effective.

But our elected officials claim that they will now address all these problems and pour billions of dollars into education, prevention, and rehabilitation of drug-abusing individuals as well as into research on the causes of addiction and its prevention. Don't hold your breath.

Of course, what is also conveniently omitted from this conversation, is how the 1998 $246 billion settlement between the tobacco industry and state attorneys general was supposed to be used to prevent people from smoking and to rehabilitate smokers was been handled. It did not. Only a small portion of the settlement money was used as it was supposed to be used (1,2,3,4)

First, here are excerpts from two reports published by Citizens against Government Waste: “In 1998, 46 states and five U.S. territories signed onto the Master Settlement Agreement (MSA) in order to recover taxpayer dollars lost to the treatment of tobacco-related health issues, which would then be used to fund anti-smoking campaigns and public health programs.  As part of the settlement, the states and territories will receive an estimated total of $246 billion over the first 25 years. CDC [Center of Disease Control] recommended that states should spend approximately $3.3 billion per year on tobacco prevention and education, but the states have budgeted a little less than 15 percent of that money, or less than $500 million, for tobacco prevention and health programs For example, New York decided to utilize its MSA payments in an elaborate scheme that would have made Bernie Madoff proud.  New York receives approximately $800 million every year from the MSA and spends about $40 million on tobacco education.

Second, Mike Moore who filed the first lawsuit against the tobacco industry said recently "In Mississippi, where the settlement money was put into a trust fund, a lot of it was spent on things other than smoking prevention and health care---So, a trust fund that should have $2.5 billion in it now doesn't have much at allDespite the massive sums of money from the tobacco settlement, along with the billions of dollars more from tobacco taxes, the states continue to underfund tobacco prevention and health programs”.  

Third, a 2013 Report of the Tobacco and Health Trust stated. “Connecticut has received nearly $2 billion over the past 15 years as part of a legal settlement meant to compensate states for the toll of tobacco - the state has spent only a tiny fraction of it to curb smoking. Instead, lawmakers have repeatedly used the money as a crutch to help balance the budget. Even the money designated for a special fund for anti-tobacco efforts and other health programs has repeatedly been raided by lawmakers to cover other expenses.

Fourth, even though a study from the National Institutes of Health in 2014 sounded the alarm about this inappropriate spending of the settlement money, the bulk of the money – albeit it varies from state to state - is still used mostly for purposes other than those for which it was originally intended!

So, it is not unreasonable to wonder what is going to happen to the very large sum of money which will be finally extracted from the pharmaceutical companies to help addicts and prevent future drug-related crises. 

Based on the precedent of the tobacco settlement, I expect the following are most likely to happen.

  1. First, some lawyers will enrich themselves with millions of dollars.
  2. Second, state and local governments will use the bulk of the money to supplement their various non-health-related budgets.
  3. Third, what little what is left will (hopefully) be used to help the addicts for whom most of the money was intended in the first place.  I sincerely hope I am wrong with this prediction and most money will indeed go to help these sick individuals and to prevent further drug-related crises. We shall see.


WSJ 10/18/2019

  1. https://www.cagw.org/thewastewatcher/smoke-what-happened-tobacco-master-settlement-agreement-money
  2. https://www.cagw.org/thewastewatcher/state-tobacco-settlement-funds-go-smoke
  3. https://www.npr.org/2013/10/13/233449505/15-years-later-where-did-all-the-cigarette-money-go
  4. https://www.cato.org/publications/commentary/great-tobacco-robbery-lawyers-grab-billions