REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Attorney to Sign the Combined Participation Form and Eight California State-Subdivision Agreements to opt in to the Proposed National Opioid Settlement as a Non-Litigating Entity Involving Opioid Manufacturers Alvogen, Amneal, Apotex, Hikma, Indivior, Mylan, Sun, and Zydus
Report
BACKGROUND
In July 2025, a new proposed settlement was announced to resolve nationwide settlements with eight drug manufacturers. The lawsuits alleged that these eight drug manufacturers (Alvogen, Amneal, Apotex, Hikma, Invidior, Mylan, Sun, and Zydus) manufactured opioid pills and worsened the nationwide opioid crisis. The proposed settlement calls for $720 million to resolve claims made by states, local governments, and special districts, including those municipalities that were not parties to the litigation. According to the settlement, the eight settling manufacturers will pay approximately $720 million over ten years, as outlined below:
- Mylan (now part of Viatris): $284,447,916 paid over nine years
- Hikma: $95,818,293 paid over one to four years
- Amneal: $71,751,010 paid over ten years
- Apotex: $63,682,369 paid in a single year
- Indivior: $38,022,450 paid over four years
- Sun: $30,992,087 paid over one to four years
- Alvogen: $18,680,162 paid in a single year
- Zydus: $14,859,220 paid in a single year.
California is expected to receive more than $70 million from these eight settlements.
Over the last ten years, prescription drug manufacturers, distributors, and pharmacies have proposed or finalized opioid settlements totaling more than $50 billion, resulting from lawsuits and claims that these companies fueled the opioid crisis. The City Attorney previously requested Council authorization to participate in opioid settlements in 2021 (RTC No. 21-1125), 2024 (RTC No. 24-0799), and earlier this year in 2025 (RTC No. 25-0886). Since joining these settlements in 2021, the City has received $540,397 in settlement funds and expended $51,586 to date. Of those funds, the City has expended $8,579 on the purchase of Naloxone utilized by the Department of Public Safety (DPS) and $43,007 to the Sunnyvale Elementary School District for providing intervention and prevention resources. The balance of the settlements is held in a project fund to be allocated to programs to combat the opioid crisis in Sunnyvale, including a continued agreement with the Sunnyvale Elementary School District, annual Naloxone replacement for DPS, and Naloxone training at the Sunnyvale Library. It is anticipated that the funds received from the settlement involving these eight manufacturers would be used similarly.
Based on the terms of the settlement agreements, the actual amount each entity will receive depends on the number of non-litigating entities that opt in. A certain percentage of cities and counties must participate in the settlement, otherwise the amount attributed to California will be reduced. Additionally, any funds received pursuant to these settlements would be limited to expenditures of approved “remediation costs,” including opioid abatement, treatment, education, and recovery. Some of the settlements allow states to receive free pharmaceutical products or cash in lieu of the products. The settlements also include a non-monetary component, prohibiting all of the eight manufacturers (with the exception of Indivior) from promoting or marketing opioid products; making or selling high dosage oxycodone pills; and implementing a monitoring and reporting system for suspicious orders. Indivior has agreed not to manufacture or sell opioid products for the next ten years, however pursuant to the agreement may continue marketing and selling medication to treat opioid use disorder.
EXISTING POLICY
Charter Section 908(b): The City Attorney shall have the power and be required to represent and appear for the City, its Council, boards and commissions, in any or all legal actions or proceedings in which they or any of them are concerned or are a party.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it is a fiscal action that has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
DISCUSSION
As a non-litigating entity, Sunnyvale may opt in to participate in the eight manufacturers’ nationwide settlements. Signing the agreements will bind Sunnyvale to the terms of the settlement so long as enough municipalities opt in to the settlement. It will also release the companies from a separate, future lawsuit brought by Sunnyvale; however, it is not recommended that Sunnyvale pursue its own lawsuit.
The calculation and allocation to Sunnyvale will be based upon the previous intrastate allocation as determined by the Attorney General. The percentage of funds allocated to each of the non-litigating entities was based upon three nationally accepted opioid metrics: incident of opioid use disorder, opioid overdose deaths per capita, and morphine milligram equivalents (i.e., the number and strength of opioid pills that entered the jurisdiction during the settlement period). Additionally, the funds must be spent on eligible abatement activities and expenditures. The City must also follow financial reporting requirements regarding the expenditure of settlement funds.
Because the amount received by the City will depend on the number of municipalities that opt in, it is difficult to ascertain the amount that Sunnyvale would be eligible to receive until after the deadline to participate has passed.
The City must register and opt into the eight manufacturers' settlement agreements by October 8, 2025. The City has received a copy of the Proposed California State-Subdivision Agreement for each of the eight settling manufacturers (Attachment 1). A discussion regarding spending and allocating the settlement funds, or exploring other options for utilizing the settlement funds, will take place once the funding amounts are known.
FISCAL IMPACT
Payment of initial settlement funds is set to begin in 2026. The eight settling manufacturers have agreed to different settlement terms for payment. Sunnyvale’s share of the $720 million settlement will be adjusted depending on the number of other entities that opt in. Based on the limitations of uses of the settlement funds (i.e., opioid abatement, treatment, education, and recovery), the City may subsequently elect to send its share to Santa Clara County for use on the City’s behalf, or elect to spend the funds itself.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
RECOMMENDATION
Recommendation
Authorize the City Attorney to execute the Combined Participation Form and eight California State-Subdivision Agreements, in substantially the same form as Attachment 1 to the report, on behalf of the City of Sunnyvale to opt in to the Settlements as a Non-Litigating Entity.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
_X_ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Anais Martinez Aquino, Senior Assistant City Attorney
Reviewed by: Rebecca L. Moon, City Attorney
Reviewed by: Matt Paulin, Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Secondary Manufacturers’ Combined Subdivision Participation and Release Form, Proposed California State-Subdivision Agreement Regarding Distribution and Use of Settlement Funds-Alvogen, Amneal, Apotex, Hikma, Indivior, Mylan, Sun, and Zydus.