PRESENTER: Presenter
Valeria Acevedo, City Attorney
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SUBJECT: Title
Approval of a resolution of the City Council of the City of New Braunfels, Texas approving participation in a settlement agreement between the State of Texas and Purdue Pharma L.P. and the Sackler Family; and authorizing the city manager to execute the Subdivision Settlement Participation Form.
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DEPARTMENT: City Attorney’s Office
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COUNCIL DISTRICTS IMPACTED: Citywide
BACKGROUND INFORMATION:
Texas is one of the lead states currently negotiating financial settlements with the nation’s largest companies in the opioid supply chain. On May 13, 2020, Texas, along with a broad, bipartisan coalition of states and subdivisions, reached two final agreements with four companies to resolve legal claims against for their role in the opioid crisis. In September 2021, City Council adopted the Texas Term Sheet as required by the settlement agreement and opted into those settlements with McKesson, Cardinal Health, ABCD, and Janssen/Johnson & Johnson, Endo/Par and Teva. (Resolution No. 2021-R-51). The city was awarded approximately $307,313.00. As with all payments, they will be made payable in varying amounts over an 18-year period. To date, the city has received 3 payments. The City received $96,471.88 on March 15, 2023, $18,767.90 on April 16, 2024, and $91,559.54 on April 1, 2025. These payments are available on the state’s website at: <https://comptroller.texas.gov/programs/opioid-council/funds/poli-sub-disbursements.php>
In 2023, the city opted into other settlement agreements with Allergan, CVS, Walgreen, and Walmart (Resolution No. 2023-R-26) from which the City expects to receive $289,592. On November 25, 2024, by Resolution No. 2024-R79, the City opted into the settlement with Kroger with the expectation of receiving a portion of those settlement funds which total $23,145.47.
Funds are to be used only to address opioid related harms and in accordance with the guidance provided by the 87th Legislature General Appropriations Act and Exhibit B of the Global Settlement Allocation Term Sheet dated May 13, 2020: <https://comptroller.texas.gov/programs/opioid-council/docs/texas-settlement-allocation-term-sheet.pdf>
At this time, there is a new settlement agreement between the State of Texas and Purdue Pharma L.P. and the Sackler Family. In order to participate, the City Council must opt in and authorize the city manager to execute and submit the Subdivision Participation Form that is attached to this agenda item by the deadline of September 30, 2025. These funds will be paid out over a period not to exceed 15 years. Here are more details on this settlement provided in a notice sent to the City of New Braunfels:
PURDUE PHARMA L.P. & SACKLER FAMILY SETTLEMENT OVERVIEW
A proposed nationwide settlement agreement has been reached with Purdue (and certain of its affiliates) and the Sackler family concerning alleged misconduct related to opioids.
The proposed settlement is being implemented in connection with Purdue’s bankruptcy proceedings, and consists of, among other things, a settlement of Purdue’s claims against the Sacklers and certain other parties (referred to as the “Estate Settlement”), and a settlement of direct claims against the Sacklers held by States, local governments and other creditors (the “Direct Settlement”, and together with the Estate Settlement, the “Settlement”). The Settlement contemplates that the Sacklers will be paying an aggregate of $6.5 billion in 16 payments over 15 years, including $1.5 billion on the settlement’s Effective Date (expected to be in 2026), though some amounts are subject to discounted prepayments. These amounts are in addition to amounts available from the Purdue estate including amounts available on the Effective Date (expected to be around $900 million) and amounts that may be paid in the future.
The Settlement also contains injunctive relief governing opioid dispensing practices and requires the successor-in-interest of Purdue Pharma L.P. to implement safeguards to prevent diversion of prescription opioids, and also restrict certain Sacklers from directly or indirectly engaging in the manufacturing or sale of opioids, as detailed in the Settlement.
The proposed settlement has two key participation steps now that all eligible states and territories elected to participate in the Direct Settlement.
First, eligible subdivisions within each participating state decide whether to participate in the Direct Settlement. The Direct Settlement is documented in the Governmental Entity and Shareholder Direct Settlement Agreement, which is commonly referred to as the “GESA”. The more subdivisions that participate, the more funds flow to that state and its subdivisions. Any subdivision that does not participate cannot directly share in any of the Direct Settlement funds, even if the subdivision’s state is settling and other participating subdivisions are sharing in settlement funds.
YOU MUST PARTICIPATE IN THE DIRECT SETTLEMENT BY RETURNING YOUR PARTICIPATION FORM IN ORDER TO RECEIVE THE BENEFITS OF THE SETTLEMENT.
Second, concurrently with the solicitation of eligible subdivisions to participate in the Direct Settlement, votes will be solicited for approval of Purdue Pharma L.P.’s bankruptcy plan, which plan will provide distributions in respect of the Estate Settlement. NOT ALL SUBDIVISIONS ELIGIBLE TO PARTICIPATE IN THE SETTLEMENT WILL RECEIVE PACKAGES TO VOTE ON THE PLAN.
Please note that this is NOT a solicitation or a request for subdivisions to submit votes on the Purdue bankruptcy plan. This settlement package only pertains to a decision to participate in the
Direct Settlement with the Sacklers.
If you receive a package to vote on the plan you should follow the applicable instructions for voting. PLEASE NOTE THAT VOTING ON THE PLAN IS SEPARATE FROM PARTICIPATION IN THE DIRECT SETTLEMENT. IT IS NOT NECESSARY TO VOTE ON THE PLAN IN ORDER TO RECEIVE THE BENEFITS OF THE SETTLEMENT.
WHO IS RUBRIS INC. AND WHAT IS THE IMPLEMENTATION ADMINISTRATOR?
The Direct Settlement provides that an Implementation Administrator will provide notice and manage the collection of participation forms. Rubris Inc. is the Implementation Administrator for the Direct Settlement and was also retained for the prior national opioid settlements.
WHY IS YOUR SUBDIVISION RECEIVING THIS NOTICE?
Your state has elected to participate in the Settlement, and therefore your subdivision may participate in the Direct Settlement. This notice is also being sent directly to counsel for such subdivisions if the Implementation Administrator has their information.
If you are represented by an attorney with respect to opioid claims, please contact them. Subdivisions can participate in the Settlement whether or not they filed a lawsuit or are represented.
WHERE CAN YOU FIND MORE INFORMATION?
Detailed information about the Settlement, including each settlement agreement, may be found at: https://nationalopioidsettlement.com/purdue-sacklers-settlements/. This website will be updated to include information about how the Settlement is being implemented in most states and how funds will be allocated within your state.
You are encouraged to review the terms of the settlement agreements and discuss the terms and benefits with your counsel, your Attorney General’s Office, and other contacts within your state.
Your subdivision will need to decide whether to participate in the proposed Settlement, and subdivisions are encouraged to work through this process before the September 30, 2025 deadline.
HOW DO YOU PARTICIPATE IN THE SETTLEMENT?
The Settlement requires that you take affirmative steps to “opt in” to the Settlement.
In the next few weeks, you will receive documentation and instructions from the Implementation Administrator. In order to participate in the settlement, a subdivision must sign and return the required documentation.
Please add the following email addresses to your “safe” list so emails do not go to spam / junk folders: dse_na3@docusign.net <mailto:dse_na3@docusign.net> and opioidsparticipation@rubris.com <mailto:opioidsparticipation@rubris.com>. Please monitor your email for the Participation Form and instructions.
All required documentation must be signed and returned on or before September 30, 2025.
ISSUE:
In order to receive settlement funds under the Purdue Pharma L.P. and Sackler Family Settlement Agreement with the State of Texas, the City Council has to opt in no later than September 30, 2025.
STRATEGIC PLAN REFERENCE:
☐Economic Mobility ☐Enhanced Connectivity ☐Community Identity
☐Organizational Excellence ☒Community Well-Being ☐N/A
[Enter Objectives/Performance Measures Supported]
FISCAL IMPACT:
The amount of funds the city stands to receive under this settlement agreement is unknown until the State of Texas knows how many cities will participate. The use of funds is limited to the prevention, detection, abatement, and treatment of opioid abuse.
Recommendation
RECOMMENDATION:
Staff recommends approval in order to receive settlement funds.