Opioid Settlement Funds: Are States Spending Them Wisely?

In March 2022, companies involved in the opioid crisis reached a settlement with New Jersey that would provide the state $1 billion over 18 years. These funds were generally understood to be used for evidence-based treatments for opioid addiction.

But earlier this year, with Governor Phil Murphy’s approval, the New Jersey Legislature passed a budget diverting $45 million of these funds to four large hospital systems with no strings attached. 

In response, the Attorney General of New Jersey released a public statement warning that if the hospital systems do not spend the “blood money” specifically on citizens struggling with addiction, then the decision would be a “slap in the face” to families bearing the brunt of our current overdose crisis.

This heated disagreement was the latest in a growing line of controversies surrounding allocations of opioid settlement dollars across America. Although experts and advocates recognize that these funds have enormous potential to support patients who have historically faced increased barriers to addiction treatment, the public health community has raised concerns that states are squandering this opportunity by spending funds as general revenue without accountability.

Origins of the Funds

States, localities, and tribal governments have recovered more than $55 billion from litigation against drug manufacturers, drug distributors, and the companies that helped them aggressively market opioids starting in the 1990s. And the opportunity keeps compounding. Earlier this year, after a long sequence of proceedings that included review from the Supreme Court, attorneys general representing all U.S. states and territories as well as the District of Columbia approved a $7.4 billion settlement with Purdue Pharma and its owners, the Sackler family, for the company’s role in fueling the opioid crisis.

Early evidence suggests that disbursed funds have already made an impact. According to a recent study, a 2.46 percent decline in overdose deaths was linked to each additional $1 of settlement funds spent per capita in 2023. But these gains rely on dedicating settlement funds to effective opioid overdose prevention strategies, a choice that is proving increasingly difficult for states.

Each year, opioid overdoses kill thousands of Americans. The number of opioid overdose mortalities more than tripled in the decade between 2010 and 2020, reaching an all-time high of 81,806 deaths in 2022. However, provisional data show that the crisis has started to improve in recent years, with opioid overdose deaths declining by 25.7 percent between 2023 and 2024.

The Centers for Disease Control and Prevention suggested that a combination of factors contributed to this improvement, including expanded distribution of naloxone, a medication that reverses opioid overdoses; improved access to medication assisted treatment for opioid use disorder (OUD); and reductions in the illicit opioid supply. Experts also believe that increased deployment of harm reduction tools, such as syringe service programs and fentanyl test strips, has played a role.

Still, it is too early to celebrate. The U.S. continues to have a higher rate of overdose death than any other country in the world, and improvements in white populations alone have driven the recent decline in mortalities by opioid overdose. In fact, the rate of opioid overdose death has increased in Black, American Indian or Alaska Native, and Hispanic populations.

To eliminate the opioid crisis once and for all, we need sustained investment in evidence-based treatment and harm reduction programs, especially in the communities facing worsening outcomes. Naturally, opioid settlement funds present an unparalleled opportunity for enabling this work.

How Have States Been Spending the Funds?

In Nevada, the governor proposed a budget in February that would allocate $5 million in opioid settlement dollars to the state’s Temporary Assistance for Needy Families (TANF) program, which provides income support to low-income families with children. In past years, Nevada covered TANF using pandemic-era relief funds from the federal government, but the expiration of that money under the Trump Administration has prompted lawmakers to turn to other funding sources. While a spokesperson for the Nevada governor stated that TANF would benefit low-income families struggling with OUD, some legislators argued that TANF’s link to opioids was tenuous at best.

In other states, the opaque nature of such allocation decisions has barred the public from evaluating the effectiveness of the settlement funds at all. In 2021, Ohio channeled $440 million — more than half its settlement dollars — to OneOhio Recovery Foundation, a private nonprofit organization created solely to distribute the funds. Immediately, OneOhio faced criticism for lacking diversity, with only one Black member among its 29-person board of directors.

But OneOhio made national headlines when it denied members of the community from attending meetings that would decide the allocation of settlement funds, arguing that it was a private nonprofit organization rather than a public entity. In response, an advocacy organization called Harm Reduction Ohio filed a lawsuit demanding access to OneOhio’s records on spending decisions. Harm Reduction Ohio prevailed in 2023, when the Supreme Court of Ohio agreed that OneOhio was the functional equivalent of a public organization.

Ohio’s failure to use transparent spending processes serves as a warning for other states. As of February, only 10 states have published reports outlining how they expect to spend all their opioid settlement funds: Colorado, Delaware, Idaho, Indiana, Massachusetts, Minnesota, New Jersey, Oregon, South Carolina, and Wisconsin. To establish accountability, the remaining states should publicize their spending plans as well.

How Should States Distribute the Funds Instead?

Considering the body of empirical literature on OUD and overdose interventions, as well as lessons learned from states’ experiences, experts have laid out guiding principles for policymakers in the process of distributing their opioid settlement funds. These principles represent three overarching themes:

1. Prioritize evidence-based services. Policies should expand naloxone distribution, addiction treatment, and harm reduction programs — not treat opioid settlement funds as general revenue. Even under increased financial pressure from federal funding cuts, states should not divert funds from opioid-related interventions. Doing so would abandon citizens who have struggled enough with increased barriers to treatment for addiction.
2. Make spending decisions transparent. States should maximize their accountability to the public by publishing their spending plans and tracking opioid-related health outcomes. 
3. Engage diverse perspectives. Without involving the communities burdened the greatest by addiction, states cannot address the key drivers of opioid overdose deaths year after year.

New Jersey has a special opportunity to redeem itself. In January, Governor-elect Mikie Sherrill will enter office, where she should commit to this patient-centered framework for disbursing opioid settlement funds. Only then can the state ensure that the “blood money” in its care will achieve justice for all families who have lost a loved one to the ongoing opioid crisis.