Oklahoma received $270 million in its settlement with Purdue Pharma, the manufacturing giant behind dangerously addictive opioid OxyContin, but the Centers for Medicare and Medicaid Services want a portion of the windfall.
That money, however, has already been allocated elsewhere.
The out-of-court settlement was reached March 26 after a two-year court battle between Oklahoma Attorney General Mike Hunter and three opioid manufacturers: Purdue, Teva Pharmaceutical Industries, and Johnson & Johnson. It wasn’t until June 12, though, that CMS sent a letter to the director of the Oklahoma Medicaid program saying, “the federal government is entitled to a portion of that amount.”
When attorneys agreed upon the settlement, Hunter allocated about $200 million to establish a treatment center at Oklahoma State University, and did so without consulting with the state legislature. About $12 million went to vulnerable cities and counties, and the rest paid attorney fees.
While the CMS letter did not specify how much money the agency requested, the letter said Oklahoma is in violation of the Medicaid Program Integrity Act, a provision of the Social Security Act which keeps an eye on Medicaid provider payments, fraud, waste, and instances of overpayment to states.
State Rep. Mark McBride, however, said that the funds should stay within Oklahoma’s borders.
“We brought the suit, I think the first one, which may be a test case to see what people can do because it is the first,” the Republican told the Washington Examiner. “Is the government entitled [to the funding]? I don’t think so. To me, that money should be used for the opioid addiction that we have in Oklahoma.”
Medicaid allows federal funding to go to states battling the opioid epidemic. Funding is allocated to treatment centers and medication assisted treatment programs that provide drugs such as methadone and buprenorphine to curb opioid cravings and to stave off painful withdrawal symptoms. However, the Medicaid program that approves waivers for states asking for funds to treat opioid use disorder requires reimbursement for what may have been overpayments.
“Any time CMS becomes aware of a settlement agreement which may involve a Medicaid overpayment, CMS works with the state to determine what portion may need to be returned to the federal government as required by law,” a CMS spokesperson said in a written statement to the Washington Examiner.
While Hunter did not respond to requests for comment, a spokesman told the Washington Examiner that the attorney general is working on a response, as CMS has granted the state more time to answer the request.
At first, McBride said, Hunter’s decision to appropriate most of the money to a single cause created some friction in the state government.
“Our [lawmakers’] position was the attorney general made the decision on his own and those funds should have been deposited into the state treasury,” McBride said. “The attorney general didn’t speak to anyone about how money should be spent.”
McBride, just one day later, said he is not upset with Hunter diverting the funds to OSU. But McBride said that in the future, lawmakers must collaborate when deciding how to allocate funding.
Oklahoma settled with one of the two other pharmaceutical giants it sued, Israel-based Teva Pharmaceutical Industries, and is still in litigation with Johnson & Johnson, which it alleges caused the “largest man-made public health crisis,” using what the state called deceptive marketing that underestimated the opiate’s addictive properties. Johnson & Johnson has not claimed responsibility.
Hunter settled with Teva for $85 million on May 26. Just two days prior, Oklahoma lawmakers passed a law that stipulates any future settlements with Big Pharma companies sued by the state must be deposited in the state treasury.
On Friday, McBride told the Washington Examiner that he had spoken directly to Hunter about the CMS request for reimbursement, and, while state legislators and officials have not yet concocted an answer, “Hunter is working diligently to make sure the CMS issue is hammered out.”
