CHEYENNE – It’s a bit premature, but with settlement money from the rash of opioid lawsuits beginning to trickle in, some observers are already warning the states to be careful with how they spend the money.
They cite as a bad example state spending of the landmark tobacco settlement in 1998. Under that agreement, the states received $246 billion for the first 25 years and continuing henceforth.
According to an earlier report from the Government Accounting Office, the states, on average, allocated only 30 percent of their settlement money to health care while 23 percent went to cover budget deficits.
States also have used the funds for education and infrastructure projects by issuing so-called tobacco bonds which are repaid through the states’ annual tobacco settlement payments, according to Governing.com.
The anti-tobacco groups wanted the money to be spent on prevention and cessation programs to help people quit smoking.
One problem is that the settlement language never specifically identified how the tobacco settlement money was to be spent.
And so the states, faced with dismal economies and weak revenues, saw the tobacco money as an easy fix to plug their budget holes.
Public health officials and other groups are hoping the proceeds from the opioid lawsuits will be spent on overdose prevention and other public health programs affected by the crisis that resulted in 70,000 deaths a year.
Wyoming filed a lawsuit Oct. 18 in state district court against Purdue Pharma, the manufacturer of OxyContin. The action claims the state paid $2.29 million in additional Medicaid claims to treat opioid addictions from 2008 to 2017.
Wyoming’s case is one of about 330 opioid lawsuits against drug companies that are pending in at least 45 states.
Fremont, Carbon and Sweetwater counties have filed similar lawsuits, along with the cities of Casper, Cheyenne and Rock Springs and the Northern Arapaho Tribe, according to published reports.
As for tobacco settlement spending, the Center for Disease Control recommends that Wyoming spend about $9 million a year (the amount fluctuates) of its money on prevention.
That hasn’t happened.
Even so, in 2013 the center ranked Wyoming No. 4 in the nation in spending on these programs. Although less than recommended, Wyoming’s spending was proportionately higher than other states which had dismal records when it came to the programs.
In 2019 the state spent only $3 million on tobacco prevention and cessation programs, according to an official statement from the American Cancer Society Cancer Action Network and its Wyoming Government Relations Director Jason Mincer.
“Comprehensive, adequately-funded state tobacco prevention and cessation programs are proven to be highly effective at preventing kids and young adults from beginning to use tobacco and helping people quit successfully,” the statement said.
“As tobacco use decreases that lowers preventable health care costs for payers and to the state.”
House Speaker Steve Harshman of Casper, however, strongly defended Wyoming’s handling of the tobacco money.
“I think Wyoming has done an exceptional job with its tobacco settlement monies and is probably the best example of what a state should do with this type of settlement,” he said in an e-mail.
The Wyoming Legislature set up a trust fund that produces income in perpetuity — the Tobacco Trust Fund and the Tobacco Trust Income Account that receives the proceeds off interest of the trust fund.
The fund, Harshman said, has a balance of more than $85 million.
The interest from the account has been used for more than 20 years to pay for the attorney general’s legal work involving the settlement money.
But most of the money has gone to the departments of Health, Corrections and Family Services for programs for prevention and cessation of tobacco, alcohol and other drugs.
“I am not aware of any instances where this money has been used for other purposes,” Harshman said.
Tobacco fund spending for the 2019 fiscal year is $10.3 million according to the Dept. of Health Budget and Information Office.
Expenses include $5 million for a substance abuse block grant or grants; $2.3 million for drug courts; $1.4 million for substance abuse prevention; $613,035 for salaries; $485,1009 for cancer surveillance and resource center and $30,792 for a client tracking system for behavioral health.
Wyoming may be short under CDC standards for tobacco prevention and cessation programs but the state isn’t diverting the money to patch highways or buy school buses.
I think the lesson is this: If and when the states and cities get bundles of money for opioid addiction treatment and prevention, the lawyers should make super clear how it is to be spent.