New York budget diverts opioid settlement money from addiction services

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Gravestones representing some of the state's population lost to overdose are placed in West Capitol Park during Capital Region Overdose Awareness Day events on Friday, Aug. 30, 2019, in Albany, N.Y. (Will Waldron/Times Union)

Albany, N.Y. — Lawmakers and advocacy groups are calling for restrictions on how New York uses future opioid settlement funds after discovering that millions of dollars from a recent settlement were placed into the state’s general fund.

Placing the money — around $21 million, according to one lawmaker — in that fund gives the state wide latitude on how to use the money. And while officials from Gov. Andrew M. Cuomo’s administration say they intend to use it all on addiction-related programming, treatment providers say they were informed last week that the money will simply replace existing state spending on those services — not increase it.

The move has angered those working on the front lines of the opioid crisis, especially as the coronavirus pandemic has fueled record drug overdose deaths. In response, advocates are pushing for lawmakers to pass legislation that would prevent similar financial maneuvers in the future.

“We are extremely saddened by this, so we are calling on the Legislature to ensure this does not happen with any future opioid settlement funds,” said Ashley Livingston, co-chair of Friends of Recovery Warren & Washington, a nonprofit providing addiction recovery support in the North Country.

“We need the Senate and Assembly to pass legislation that will protect the future funds that will be coming into New York,” she said. “This money is not free money. This money has a human cost attached. The opioid manufacturers and distributors are settling because they know their unethical practices took the lives of our loved ones.”

The settlement money comes from McKinsey and Company, a major consulting firm that advised Purdue Pharma in marketing and selling OxyContin, a prescription painkiller that helped kickstart the opioid crisis more than two decades ago. McKinsey was accused of helping to promote and profit from the drug while Purdue knowingly downplayed its addictive qualities.

In February, McKinsey struck a $573 million settlement deal with New York and 46 other states, as well as the District of Columbia and five U.S. territories, who had all brought claims against the firm for their alleged role in the crisis.

New York is slated to receive upwards of $32 million from the settlement, which must be used for opioid prevention, treatment and recovery services. It’s the first of several major opioid settlement funds to hit state coffers since states began to sue en masse. Additional settlements with other companies are expected in the near future.

“This is such a slap in the face to the families who’ve lost people,” said state Sen. Peter Harckham, who chairs a committee on alcoholism and substance abuse. “They at least had the consolation that their loved one’s loss would not be in vain because this blood money would go to help future families. Now that the administration has scooped it into the general fund it could be filling potholes or building tramways to who knows where.”

Harckham and others have likened the move to what happened after a master settlement agreement was reached with tobacco companies, when states used much of the funds to plug budget holes rather than on tobacco cessation services.

He said he is pushing for legislation that will create a lockbox for future opioid settlement money, with substance-use treatment providers and affected families being the sole beneficiaries. The Senate included language in its one-house budget proposal to do this, he said, but it never made it into the enacted budget.

“The big worry now is that as we get really substantial money coming in from the ( Johnson & Johnson) suit and other suits, that we really have an airtight lockbox so that no future administration can do this again,” he said.

Cuomo’s office did not respond to questions about the settlement funds this week and referred comment to the state Division of the Budget.

Budget spokesperson Freeman Klopott said New York is slated to receive $28 million from the $32 million McKinsey settlement share during the current fiscal year. The rest will be distributed in $1.4 million annual allotments, he said.

” New York state has fought hard to ensure those who prospered from the opioid crisis pay a price that offsets the costs of combating it and all $28 million the state will receive from this settlement in fiscal year 2022 is dedicated to combating addiction and save lives as approved by the Legislature in the budget they passed this month,” he said.

Klopott said $11 million will be used to increase support for medication assisted treatment in state prisons and $1.25 million will be used to restore funding for syringe exchange programs and for the purchase of naloxone to combat overdoses.

The state also anticipates $105 million in federal funds toward the effort over the next two years, he said.