Board approves ordinances to accept $266.7 million in opioid settlements; controller outlines segregated accounts and reporting

The San Francisco Board of Supervisors on Sept. 5 approved three ordinances authorizing settlements with opioid manufacturers and distributors totaling about $266.7 million.

The ordinances, taken together as items 9 through 11 on the agenda, authorize settlement of lawsuits brought by the city and people of the state of California against Walgreens (about $229,000,000), Cephalon, Inc., Teva Pharmaceuticals USA, Inc. and related entities ($24,800,000), and Allergan Finance LLC (approximately $12,900,000). The measures passed first reading with an 11-0 vote.

Supervisor Dean Preston opened discussion by thanking the city attorney’s office for negotiating the settlements and urging transparency in how proceeds will be used. “Securing these funds for our city will help ensure that we have the resources to address this issue, both in the short and long term,” Preston said.

Controller Ben Rosenfield told the board the city will place proceeds into segregated special funds, each with its own reporting and eligible-use rules. "We maintain segregated accounts for each of the settlements, each of which has slightly different reporting and eligible use requirements associated with them," Rosenfield said. He added the controller’s office will track each account and provide regular public reports to the board and, in some cases, back to the courts per the settlements.

Rosenfield said the payment schedules for the settlements vary; some payments are spread across many years and are generally front-loaded. He told supervisors that the mayor’s recently adopted budget appropriated “approximately a hundred million dollars in settlement proceeds over the next two years,” and the controller’s office will prepare an updated multiyear chart showing what has been received, what has been appropriated, and what remains.

Deputy City Attorney Anne Pearson identified attorneys who worked on the litigation and thanked outside counsel and staff for their efforts. "It's been a very heavy lift," Pearson said, naming several lead attorneys who supported the work.

The settlements are described in the ordinances as resolving claims that defendants falsely and misleadingly marketed opioids as safer than they were and distributed large volumes of opioids into San Francisco despite knowledge of a growing epidemic.

The board’s action establishes the legal authority for the city to accept the funds and directs finance staff to place the proceeds in the special accounts described by the controller. Rosenfield said eligible uses will need to be evaluated each year as part of the normal budget process because each settlement includes its own terms for allowable spending and reporting.

Supervisors praised the city attorney’s office and the controller’s staff for moving the litigation to settlement, and asked the administration to provide clear schedules and transparent reporting to ensure dollars are directed to overdose prevention, treatment and recovery efforts as intended by the agreements.

The board voted to pass the three ordinances on first reading; additional procedural steps will follow before final appropriation and distribution of funds.