How state governments should use opioid settlement funds

States have discretion in how they prioritize prevention, treatment and recovery strategies in their opioid epidemic response.

States that are leading these efforts have set up independent governance bodies to establish strategic direction and objective measures for how and where opioids abatement dollars are directed. These bodies are composed of diverse stakeholders, including state government leaders, academics, community representatives and private sector experts.

The negotiated opioid settlement dollars come with approved uses following lessons learned from billions in tobacco settlements collected by states that critics say were not adequately directed to programs that reduce tobacco use through funded programs. In addition to meeting opioid settlement funds’ uses, metrics for success must be defined and measured to enable public trust in state opioids abatement initiatives. Whether it is through outcome-based budgeting, purpose-driven spending or another budgetary framework focused on programs and evidence-based decision-making, each state can take a tailored approach.

There are many evidence-based strategies in opioids abatement that can improve survival rates, including greater access to naloxone to reverse overdose deaths. But states must also consider strategic policies to address the epidemic’s effects on the economy and the underlying social barriers that directly and indirectly influence substance use disorder (SUD), including opioid use disorder (OUD), such as mental health services access and the social determinants of health (SDoH).

Opioid epidemic economic impact

Data does vary, but even the most conservative economic impact studies suggest the opioid crisis has a significant economic impact across the United States. An EY-Parthenon analysis of published studies shows that the US opioid epidemic erased more than $720 billion from the US economy on average in 2017-2018.¹ The economic impact from opioid use disorder and overdose deaths includes the costs borne by the health care and criminal justice systems, the loss of business productivity and the value of premature deaths, including an individuals’ lost lifetime earnings. In addition to the millions of workers who died during prime employment years or stopped working due to opioids, there are intangible costs, including reduced quality of life for families, communities and society at large, as a consequence of the epidemic.

Annual estimate of economic impact from the opioid epidemic (in $b)

The opioid epidemic grew dramatically during the COVID-19 pandemic; personal mental health challenges, increases in substance abuse and overdose deaths also rose dramatically over that same time period. Recent analysis suggests that increased substance abuse during the pandemic is estimated to account for 9% to 26% of the decline in prime-age labor force participation between February 2020 and June 2021,² further reinforcing the need to address other factors and mitigate the impact of the opioid epidemic. This broad range represents the upper and lower bounds of the possible implications for labor force participation depending on the proportion of deaths from new opioid users compared to existing users. According to a report from the Joint Economic Committee of the US Congress in September 2022, the economic impact of the opioid epidemic rose 37% between 2017 and 2020 to nearly $1.5 trillion annually.

Opioid epidemic impact on marginalized populations

Illicit fentanyl entering US drug markets has most dramatically affected Black, Hispanic and Native American populations with serious and negative outcomes. While deaths increased in all populations during the pandemic, overdose deaths grew at disproportionately high rates in Black, Hispanic and Native American populations, according to a 2022 Statista report.

Historically, Black populations had less access to opioid prescriptions than White populations, which is believed to be due to inequities in health care system access and implicit bias in prescribing practices. While these behaviors resulted in fewer prescription opioid-associated deaths among Black people than White people, trends have reversed in recent years. Over the period 2017–2020, the death rate in Black people grew more than 100%, from roughly 13 to 26 per 100,000, surpassing the death rate of 25 deaths per 100,000 in the White population. Shockingly similar increases are observed in Hispanic (93%) and Native Americans (75%) over the same time period — for comparison, White deaths increased 30%.

Death rate involving fentanyl, per 100,000, by ethnicity

Researchers from Boston Medical Center and Boston University School of Medicine cite a lack of access to overdose prevention and treatment resources as a likely cause of rising opioid overdose deaths in Black populations in some states.

Drug use generally, and opioid use specifically, is associated with the five SDoH domains: economic stability, education access and quality, health care access and quality, neighborhood and built environment, and social and community context. Strategies that impact SDoH disparities in marginalized populations are likely to have an outsized impact on OUD and death, in addition to reducing disparities, addressing social and health inequities, and improving quality and length of life for all individuals in these communities.

While the role state governments play now in opioid abatement is to rapidly address death and exposure to fentanyl and future iterations of deadly synthetic opioids, economic challenges and inequity should be longer-term objectives. As such, many states require investments that develop enhanced capabilities and relationships to effectively achieve these objectives in the longer-term.

Assessing data collection and analytics, existing drug-related capabilities and relationships across wide geographies will be important for current and future success. These assessments are independent of, but complementary to, the significant operational and fiduciary responsibilities associated with the opioid settlement funds, including reporting, distribution and establishing controls that minimize fraud, waste and abuse. Investing in capabilities and defining clear strategic priorities for use of abatement funds through direct involvement of state and local agencies, community-based organizations and other stakeholders will bring forward new ideas that will be necessary to tackle the opioid crisis. These efforts might also incorporate initiatives that address the economic impacts and support marginalized communities that are being differentially impacted in a way that creates a long-term framework for success.

State leaders can consider five priorities, based on evidence on effectiveness in prevention, treatment and recovery for OUD. These include:

• Tackle poverty and support employment: A 1% increase in poverty and unemployment rates is associated with a 1.7% and 4.6% increase, respectively, in drug overdose death rates, according to a 2018 research brief from the U.S. Department of Health and Human Services. Employment programs for people in recovery can prevent recurrence of symptoms and increase labor force participation.
• Address mental health components of addiction: Outpatient psychosocial and medication for OUD (methadone, buprenorphine or naltrexone) costs between 9%–47% less than the current average Medicare advantage health and pharmacy claims related to OUD patients, depending on the type of treatment used.³ Expanding access to treatment centers and other supportive services improves quality of life by addressing needs across the SDoH domains.
• Improve child and family welfare: The rate of neonatal abstinence syndrome (NAS), fetal withdrawal from maternal drug use, increased 70% from 2010 to 2018, resulting in adverse neuro-cognitive, behavioral and developmental outcomes, as well as increased hospital costs. To improve outcomes, efforts are needed to reduce stigma around use of medication for OUD in pregnant individuals.
• Break the cycle of incarceration: 24%–36% of opioid-dependent Americans cycle in and out of jail each year, with Black, Hispanic and Native American populations disproportionately represented in prisons. While 80% of the prison population experiences SUD, less than 10% receive proper treatment.⁴ Increasing access to medication and services for OUD in these settings improves life course outcomes for individuals.
• Boost education outcomes: High drug mortality rates by county are associated with lower third grade student test scores, and opioids constituted more than 70% of the drug deaths for the period studied from 2009 to 2014, the Brookings Institute found. Research shows investment in prevention can yield improvements in four-year college completion and mental health outcomes, increase future earnings, and reduce costs to the criminal justice and health care systems.

Conclusion:

Opioid abatement efforts by states that consider broader economic and societal impacts can prevent death, improve lives and deliver change in devastated communities. There are many evidence-based strategies that support prevention, treatment and recovery objectives. We believe through a few key examples, states’ investment in complementary areas that account for the SDoH domains can reap measurable and impactful results that are broader and more durable, resulting in stronger communities, economies and societies.

Nothing can or will make up for the devastating number of lives lost. However, with intentional planning, states can make sure that settlement dollars have the maximum possible impact and curtail the dramatic human and economic toll the opioid epidemic is having across the United States. As states and communities work to reduce opioid deaths, opioid settlement funds can make a difference if they finance flexible programs and interventions and if they are managed with transparency and accountability.

Thank you to Lydia Boussour and Bill Ding who contributed to this article.