Virginia will get $1.1 billion in opioid settlement money. Here's how it's being spent.

Virginia will receive more than $1 billion over the next 15 years for opioid abatement efforts as part of its participation in national settlements against various companies for their alleged involvement in fueling the U.S. opioid epidemic.

Meanwhile, cities that signed on as plaintiffs in opioid lawsuits also have received millions in payouts. As recently as last month, Hampton and Newport News agreed to join the nationwide Purdue Pharma settlement agreement, and will be among the thousands of municipalities that split a $7.4 billion settlement.

While the settlements are meant to pay address opioid misuse, treatment or to address the harms of the epidemic, rules governing how settlement money is spent vary, in part based on the recipient. Here’s a look at where the money is coming from and how it’s being handled:

Where’s the money from?

More than 800,000 people died from an opioid overdose in the United States between 1999 and 2023, according to the Centers for Disease Control and Prevention. The opioid epidemic hit the country in three waves, fueled first by aggressive marketing and overprescribing of prescription opioids. Later, use of heroin soared as people who became addicted to prescription opioids were no longer able to obtain the controlled substance. Then came a surge of synthetic opioids such as fentanyl.

Lawsuits followed, taking aim at pharmaceutical companies and drug distributors. By 2017, more than 3,000 had been filed by states and cities nationwide against pharmaceutical companies, which were consolidated into a National Prescription Opiate Litigation to be decided by a single judge. All of the alleged opioid manufacturers or distributors in the case were to settle individually by striking a settlement deal on a national level that the judge accepts, which states with at least an 85% approval rating from their localities then agree to sign on to.

Some of the biggest national opioid settlements:

•Marketing and consulting firm McKinsey settled for roughly $650 million in December after partnering with Purdue Pharma.

•The three biggest pharmaceutical drug distributors in the United States, Mckesson, Cardinal Health and AmerisourceBergen, settled for up to a combined $21 billion in 2021 to be paid over 18 years.

•Drug manufacturer Janssen Pharmaceutical did not settle ongoing litigation, but committed up to $5 billion over toward the Nationwide Opioid Settlement Agreement in 2022.

•Drug manufacturer Teva agreed in 2022 to pay up to $3.34 billion over 13 years and either $1.2 billion worth of Narcan over 10 years or $240 million in cash, decided by the state, and manufacturer Allergan agreed to pay up to roughly $2 billion over seven years.

•Pharmaceutical giant CVS agreed to pay $4.9 billion over 10 years, and Walgreens agreed to pay up to roughly $5.5 billion over 15 years.

•Walmart agreed to pay up to $2.75 billion within six years in 2023.

Virginia’s opioid clearinghouse

Virginia is expected to receive more than $1.1 billion through fiscal year 2042 from those settlements.

Nearly a third of that goes directly toward cities and counties that are plaintiffs, and 15% is distributed to the state to be allocated by the General Assembly. The other 55% flows through the Opioid Abatement Authority, which the General Assembly established in 2021 to help manage and appropriate settlements across the commonwealth using a fund paid into the state treasury, according to the authority.

The authority already has received roughly $180 million and has awarded roughly $110 million in grants to localities across the commonwealth, according to Executive Director Tony McDowell.

There are two main ways cities can get money from the authority, McDowell said. Each has a set amount of money available per year for substance use abatement projects, but they must apply for it. The second way, which has a larger pot of money, is through competitive grants in which cities can join in regional efforts to compete for funding.

“When you start to add together the money they’re getting directly, the money we have for them, plus the competitive money, it’s complicated,” McDowell said. “But at the end of the day, it’s a lot of money.”

Newport News, for example, has received roughly $1.8 million in direct settlement payments, according to city spokesperson Kimberly Bracy. The money has gone toward projects such as providing substance use counseling and medications in Newport News City Jail, funding operations for the city’s District Court mental health docket and supporting the Hampton-Newport News Community Services Board’s Mobile Medication Unit and Peer Recovery Oriented System of Care.

McDowell added as opioid use grew, grant requirements were expanded to include mental health conditions and other addictions that often overlap with opioid misuse. But they must provide proof of the project’s efficacy.

“When they apply for a grant, they have to describe the effort that they’re proposing to implement and what the connection is to opioid use disorder,” McDowell said. “There has to be some evidence or proof that the effort is legitimate. We don’t want any money to be squandered on a treatment that’s just a wives’ tale.”

However, where that money goes once it reaches the local level isn’t always known , McDowell said. Settling companies make their own reporting requirements on payments made directly to localities. According to McDowell, most companies haven’t laid out many requirements for cities and counties to report their spending.

“There’s concern that some cities or counties might take some of their opioid settlement money and spend it on things totally unrelated to substance use,” McDowell said. “There are very few guardrails preventing them from doing that.”

That’s why the authority has established guardrails of its own. Any distribution from the authority includes a condition where the locality must submit a ledger tracking its spending of payments received directly from companies, according to McDowell.

“If they want money from us, they have to tell us what they did with the money they got directly from the companies,” he said.

Additionally, the authority offers a “voluntary gold standard incentive,” which offers localities that commit to using money solely for approved opioid remediation purposes a 25% increase in available money, according to McDowell.

Nearly 70 localities have opted in to the agreement, including Norfolk, Hampton, Newport News and Virginia Beach. On the Peninsula, Hampton and Newport News together have received more than $100,000 in extra gold standard funds. That’s in addition to a $236,000 individual award to Newport News, and a $185,000 award to Hampton in fiscal 2025.

Local impact

Fatal opioid overdoses, including from fentanyl, heroin and prescription opioids, have fallen since peaking at more than 2,200 in 2021, according to the Virginia Department of Health. Last year, 1,221 deaths were attributed to opioid overdoses. In the first quarter of this year, preliminary data shows 226 people have died from opioid overdoses.

The opioid epidemic has hit close to home in recent years. More than 600 Hampton Roads residents died from overdoses in 2022, with roughly 80% of those involving fentanyl. Newport News is one of the hardest hit Virginia cities, especially among its African American community. Between 2019 and 2023, 107 Black residents died from opioid overdoses in Newport News, a 114% increase over that time, according to data from the Virginia Opioid Abatement Authority.

The state’s Opioid Abatement Authority is working to ensure every locality receives as much money as possible, McDowell said, because money that sits for five years in a locality’s account goes back into the state pot.

“We’re trying to encourage them to hurry up, and we’re here to help them come up with ways to do that,” McDowell said. “We provide a lot of resources to cities and counties to help them figure out how to structure their programs so that they can make the most use of these funds.”

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