025-21 (ParticipationInProposedOpioidSettlement) BOARD OF SUPERVISORS
RESOLUTION
Approving of the County's Participation in the Proposed Settlement
of opiold-belated Claims against McKesson, Cardinal Health,
AmerisourceBergen, Janssen, and Their Related Corporate Entities,
and Directing the County Attorney and/or the County's outside
Counsel to Execute the Documents Necessary to Effectuate the
County's Participation in the Settlements
WHEREAS, the opioid epidemic that has cost thousands of human lives across the
country also impacts Frederick County by adversely impacting the delivery of emergency
medical, law enforcement, criminal justice, mental health and substance abuse services, and
other services by Frederick County's various departments and agencies; and
WHEREAS, Frederick County has been required and will continue to be required to
allocate substantial taxpayer dollars, resources, staff energy and time to address the damage the
opioid epidemic has caused and continues to cause the citizens of Frederick County; and
WHEREAS, Frederick County has filed suit against McKesson, Cardinal Health,
AimerisoureeBergen, and Janssen Pharmaceuticals, along with certain of their related corporate
entities for their role in the distribution, manufacture, and sale of the pharmaceutical opioid
products that have fueled the opioid epidemic that has hanned Frederick County; and
WHEREAS, the County's suit seeks recovery of the public funds previously expended
and to be expended in the future to abate the consequences.and harms of the opioid epidemic;
and
WHEREAS, settlement proposals have been negotiated that will cause McKesson,
Cardinal Health, AmerisourceBergen, and Janssen to pay up to $26 billion nationwide to resolve
opioid-related claims against thein; and
WHEREAS, the County's outside opioid litigation counsel has recommended that the
County participate in the settlements in order to recover its share of the funds that the settlement
would provide; and
WHEREAS, the County Attorney has reviewed the available information about the
proposed settlements and concurs with the recommendation of outside counsel;
NOW THEREFORE BE IT RESOLVED that the Frederick County Board of
Supervisors, this 13t1' day of October, 2021, approves of the County's participation in the
proposed settlement of opioid-related claims against McKesson, Cardinal Health,
AmerisourceBergen, Janssen, and their related corporate entities, and directs the County
Attorney and/or the County's outside counsel to execute the documents necessary to effectuate
the County's participation in the settlements, including the required release of claims against
settling entities.
ADOPTED this 13'11 day of October, 2021.
Charles S. DeHaven, Jr., Chairman Aye Shawn L. Graber Aye
J. Douglas McCarthy Aye Robert W. Wells Aye
Blaine P. Dunn Absent David D. Stegmaier Aye
Judith McCann-Slaughter Aye
Mary T. Price
Interim Clerk, Board of Supervisors
County of Frederick, Virginia
Res, No. 025-21
COUNTY OF FREDERICK
-F
r Roderick B. Williams
County Attorney
5401722-8383
Fax 540/667-0370
E-mail rwillia@fcva.us
MEMORANDUM
TO: Board of Supervisors
FROM: Roderick B. Williams, County Attorney
DATE: October 6, 2021
RE: Opioids Litigation—Nationwide Settlements with Three Large Distributors and
Janssen
In conjunction with the ongoing nationwide opioids litigation,the three largest
pharmaceutical distributors,McKesson Corp., Cardinal Health and AmerisourceBergen
("Distributors"), and manufacturer Janssen Pharmaceuticals, Inc. and its parent company
Johnson& Johnson ("Janssen")have reached agreement on global settlements that promise to
provide up to $26 billion in value nationwide. To advance these settlements, localities need to
adopt resolutions formally approving the settlements.As the Board is aware, outside counsel is
representing Frederick County and over 50 other Virginia localities in the opioids litigation.
Outside counsel is recommending that the localities participate in the settlements. A brief further
explanation of the settlements follows and attached is a form of a resolution approving the
County's participation in the settlements,presented for the Board to consider adopting.
In summary,the settlements have the potential to provide as much as $530 million to
Virginia, to be paid over a period of 18 years. That amount would be distributed according to the
Memorandum of Understanding("MOU")that the Virginia Attorney General's Office and
numerous Virginia localities, including Frederick County,have approved. Specifically,the MOU
provides for an allocation of proceeds to the Commonwealth directly,to the Virginia Opioid
Abatement Authority,and to the localities via direct payments.Approximately$203 million will
be allocated directly to participating localities in Virginia over the lifespan of the settlement
payments. Frederick County's share is 1.277%of that direct allocation to localities. Therefore,
the County would receive as much as almost$2.6 million under the settlements now pending.
The settlements are contingent on the Distributors and Janssen determining that a
sufficient critical mass of localities nationwide approve of the settlements. Localities have until
107 North Kent Street • Winchester,Virginia 22601
January 2, 2022 to determine whether they wish to participate in the settlements. After that gate,
the Distributors and Janssen will have 30 days to decide if the number of participating localities
is sufficient for them to declare the settlement final and effective. if the Distributors and Janssen
do elect to declare the settlement final and effective, Virginia localities could begin to receive the
first installments of settlement payments as early as April 2022. The precise settlement amounts
are also contingent on the level of participation in the settlements by localities within each state.
Participation rates in other states do not affect Virginia's settlement amount. Each state's
participation rates affect only the settlement amount available for that state. Even if Virginia
does not meet any of the enhanced participation thresholds in the proposed settlement,the
settlement stili sets a base payment of approximately one half of the proposed settlement amount.
Outside counsel's recommendation to participate in the settlement encompasses the
following considerations:
• The settlements are the result of years of hard-fought litigation and negotiations, and, if
adopted, they will provide significant and much needed resources to the Commonwealth
and to localities with which to battle this emergency epidemic.
• Moreover, this funding will begin to be available almost immediately, versus what would
undoubtedly be many more years of litigation before a Virginia trial against these
defendants,whose future economic prospects, if settlements are not achieved, would be
uncertain in the face of such huge, nationwide litigation exposure.
• Because Virginia local governments have developed a cohesive,united front in opioid
litigation and because participating local governments will be fully aligned with the
Attorney General's Office vis-a-vis these settlements, it is anticipated that Virginia will
be able to maximize the financial recovery under the applicable settlement agreements
which will result in a sizeable $530 million gross recovery to Virginia.
Please note that these settlements represent recovery for just one set of claims that the
County and the other localities are pursuing relative to the opioid epidemic. Therefore,the
County can reasonably expect other proceeds in addition to the $2.6 million from these parties.
Board adoption of the attached resolution approving the settlements is requested.
Attachment
cc: County Administration