Iowa's opioid settlement funds

Iowa was recently involved in several lawsuits against pharmaceutical drug companies, drug distributor firms and giant pharmacy companies regarding opioids.

Over time, these suits generated a number of separate settlements with states and local governments to address the impacts of opioid abuse in the United States. This approach was modeled after the actions of the mid-1990s when states banded together and sued tobacco companies for the costs of smoking-related illnesses. However, there are some key differences.

Unlike the tobacco settlement, the cases against the opioid industry were settled on an individual basis. Currently, the state of Iowa is involved in eight separate opioid lawsuit settlements. Unlike the tobacco settlement, these payments are going to the states and to local governments (primarily counties). Furthermore, an additional difference is the opioid settlements come with 15 pages of restrictions on how the settlement payments can be used.

Like the tobacco settlement, the Iowa Legislature took action to make sure Iowans had a voice in how the payments from opioid settlements will be used. The 2022 legislative session saw the creation of the Opioid Settlement Fund. All settlement payments received after the Opioid Settlement Fund’s creation will now be appropriated as part of the state’s budget. So, how much does the state currently have in the Opioid Settement Fund and how much will we get in the future?

According to the State Treasurer’s office, Iowa currently has $27.4 million in the Opioid Settlement Fund. While a sizeable amount, this is a small fraction of what the state received from the tobacco settlement. And unlike the tobacco settlement, the payment structures for each opioid settlement vary significantly. While the payments from opioid distributors will continue until Fiscal Year 2039, some payments will be over at the end of this year.

The varying amounts and timelines for the opioid settlements means the inflow of revenues to the state fluctuates. In Fiscal Year 2024, the state is expected to receive $11.5 million for these settlements. That amount rises to almost $12.7 million in FY 27, when the amount starts to decline. They will fall to $9.8 million in FY 2030, $6.4 million in FY 2035, and end with just $3.4 million coming in during FY 2039.

A new complicating factor has emerged in recent weeks to this process – bankruptcy. One of the companies who settled with state and local governments subsequently filed for bankruptcy protection. Surprisingly, the federal bankruptcy court decided that the company should be able to discharge at least part of the settlement payments. This action has some wondering if other companies involved in these settlements will consider taking a similar path.

Having a clear understanding of the amounts of available funds and what the rules are for their use is an important first step before the state begins to set up a long-term plan for the use of the Opioid Settlement Fund. There is no shortage of requests for funding through the settlement, but we need to make sure we continue to ask questions, research and put that money in the best place for Iowans.

Rep. Megan Jones, R-Sioux Rapids, serves parts of Clay and Buena Vista counties in Iowa House District 6.