Opioid Settlement Overview

National Opioids Settlements EGawig
P.O. Box 43196

Providence, RI 02940-3196
SEP 2 8 2021
NPD

ut oy ae

122810002165

Postal Service: Please do not mark barcode
NPD AA-176-153

J. Pierce City Attorney

10000 N El Mirage Rd

El Mirage, AZ 85335

TO LOCAL POLITICAL SUBDIVISIONS:
IMPORTANT INFORMATION ABOUT THE NATIONAL OPIOID SETTLEMENT.

SUBDIVISIONS MUST SUBMIT SIGNED DOCUMENTATION TO PARTICIPATE.
THE DEADLINE FOR PARTICIPATION TO MAXIMIZE SETTLEMENT BENEFITS IS JANUARY 2, 2022.

If your subdivision is represented by an attorney with respect to opioid claims, please immediately contact them.
SETTLEMENT OVERVIEW

After years of negotiations, two proposed nationwide settlement agreements (“Settlements”) have been reached
that would resolve all opioid litigation brought by states and local political subdivisions against the three largest
pharmaceutical distributors, McKesson, Cardinal Health and AmerisourceBergen (“Distributors”), and one
manufacturer, Janssen Pharmaceuticals, Inc., and its parent company Johnson & Johnson (collectively, “Janssen’’).

The proposed Settlements require the Distributors and Janssen to pay billions of dollars to abate the opioid
epidemic. Specifically, the Settlements require the Distributors to pay up to $21 billion over 18 years and Janssen
to pay up to $5 billion over no more than 9 years, for a total of $26 billion (the “Settlement Amount”). Of the
Settlement Amount, approximately $22.7 billion is earmarked for use by participating states and subdivisions to
remediate and abate the impacts of the opioid crisis.

The Settlements also contain injunctive relief provisions governing the opioid marketing, sale and distribution
practices at the heart of the states’ and subdivisions’ lawsuits and further require the Distributors to implement
additional safeguards to prevent diversion of prescription opioids.

Each of the proposed Settlements has two key participation steps. First, each state decides whether to participate
in the Settlements. Arizona has joined both Settlements. Second, the subdivisions within each participating state
must then decide whether to participate in the Settlements. Generally, the more subdivisions that participate, the
greater the amount of funds that flow to that state and its participating subdivisions. Any subdivision that does not
participate cannot directly share in any of the settlement funds, even if the subdivision’s state is settling and other
participating subdivisions are sharing in settlement funds.

This letter is part of the formal notice required by the Settlements.
WHY IS YOUR SUBDIVISION RECEIVING THIS NOTICE?

You are receiving this letter because Arizona has elected to participate in both of the two national Settlements
against (1) the Distributors, and (2) Janssen, and your subdivision may participate in the Settlements. This notice
is being sent directly to subdivisions and also to attorneys for subdivisions that we understand are litigating
against these companies. If you are represented by an attorney with respect to opioid claims, please immediately
contact them. Please note that there is no need for subdivisions to be represented by an attorney or to have filed a
lawsuit to participate in the Settlements.

WHERE CAN YOU FIND. MORE INFORMATION?

This letter is intended to provide a brief,overview of the Settlements. Detailed information about the Settlements
may be found at: https://nationalopioidsettlement.com/. This national settlement website also includes links to
information about how the Settlements are being implemented in your state and how settlement funds will be
allocated within your state. This website will be supplemented as additional documents are created. The Arizona
Attorney General’s office has also set up a state-specific website, which may be found at: azag.gov/opioids.

HOW DO YOU PARTICIPATE IN THE SETTLEMENTS?

You must go to the national settlement website to register to receive in the coming weeks and months the
documentation your subdivision will need to participate in the Settlements (if your subdivision is eligible).
All required documentation must be executed and submitted electronically through the website and must
be executed using the “DocuSign” service. As part of the registration process, your subdivision will need to
identify, and provide the email address for, the individual who will be authorized to sign formal and binding
documents on behalf of your subdivision.

Your unique Subdivision Registration Code to use to register is: ZG435R
HOW WILL SETTLEMENT FUNDS BE ALLOCATED IN EACH STATE?

The settlement funds are first divided among the participating states according to a formula developed by the
Attorneys General that considers population and the severity of harm caused by the opioid epidemic in each
participating state. Each state’s share of the abatement funds is then further allocated within each state according
to agreement between the state and its subdivisions, applicable state allocation legislation, or, in the absence of
these, the default provisions in the agreements.

Many states have or are in the process of reaching an agreement on how to allocate abatement funds within the
states. Allocation agreements/legislation and other information about Arizona’s allocation agreement or legislation
can be found on the national settlement website. The allocation section of the website will be supplemented as
more intra-state allocation arrangements are finalized. Arizona’s state-specific website will be updated as well.

In reviewing allocation information, please note that while all subdivisions may participate in the Settlements,
not all subdivisions are eligible to receive direct payments. To promote efficiency in the use of abatement funds
and avoid administratively burdensome disbursements that would be too small to add a meaningful abatement
response, certain smaller subdivisions do not automatically receive a direct allocation. However, participation by
such subdivisions will help maximize the amount of abatement funds being paid in the Settlements, including
those going to counties, cities, parishes, and other larger subdivisions in their communities.

To determine your eligibility to receive, directly or indirectly, any of the funds allocated to your state should
you elect to participate in the settlements in which your state participates, you should first visit https://
nationalopioidsettlement.com/ to determine if your state has entered into a state-subdivision agreement or has
an allocation statute and/or a statutory trust. If so, then the terms of the state-subdivision agreement, allocation
statute, and/or statutory trust (as applicable) will govern your eligibility to receive funds directly or indirectly
from the share that is allocated to your state under the national settlement agreements. In some states there will
be a proposed state-subdivision agreement that is in the process of being adopted by subdivisions. Any questions
concerning the status or terms of the state-subdivision agreement, allocation statute, and/or statutory trust in your
state, if applicable, can be directed to the Attorney General’s Office.

You may be contacted by the Attorney General’s Office with additional information regarding the allocation of
settlement funds in Arizona. Subdivisions with representation can expect information from their attorneys as well.
We encourage you to review all materials and to follow up with any questions. The terms of these Settlements
are complex and we want to be sure you have all the information you need to make your participation decision.

WHY YOU SHOULD PARTICIPATE

A vast majority of states have joined the Settlements and attorneys for many subdivisions have already announced
support for them. For example, the Plaintiffs’ Executive Committee, charged with leading the litigation on behalf
of more than 3,000 cities, counties and others against the opioid industry, and consolidated in the national multi-
district litigation (“MDL”) pending before Judge Dan Aaron Polster in the Northern District of Ohio, recommends
participation in these Settlements.

Subdivision participation is strongly encouraged, for the following reasons:

First, the amounts to be paid under the Settlements, while insufficient to abate the epidemic fully, will allow state
and local governments to commence with meaningful change designed to curb opioid addiction, overdose and
death;

Second, time is of the essence. The opioid epidemic continues to devastate communities around the country and
it is critical that the funds begin to flow to allow governments to address the epidemic in their communities as
soon as possible;

Third, if there is not sufficient subdivision participation in these proposed Settlements, the Settlements will not
be finalized, the important business practice changes will not be implemented, the billions of dollars in abatement
funds will not flow to communities, and more than 3,000 cases may be sent back to their home courts for trial,
which will take many years;

Fourth, the extent of participation also will determine how much money each state and its local subdivisions
will receive because approximately half of the abatement funds are in the form of “incentive payments,” i.e., the
higher the participation of subdivisions in a state, the greater the amount of settlement funds that flow into that
state;

Fifth, you know first-hand the effects of the opioid epidemic on your community. Funds from these Settlements
will be used to commence abatement of the crisis and provide relief to your citizens while litigation and settlement
discussions proceed against numerous other defendants in the opioid industry; and

Sixth, because pills do not respect boundaries, the opioid epidemic is a national crisis that needs a national solution.
NEXT STEPS

These Settlements require that you take affirmative steps to “opt in” to the Settlements. If you do not act, you
will not receive any settlement funds and you will not contribute to reaching the participation thresholds that will
deliver the maximum amount of abatement funds to your state.

First, register your subdivision on the national settlement website so that information and documents required to
participate can be sent to you. You will need the email address of the person who will be authorized to sign on
behalf of your subdivision. This is the only action item needed at this time.

Second, have your authorizing person(s) or body begin to review the materials on the websites concerning the
settlement agreement terms, allocation and other matters. Develop a list of questions for your counsel or the
Attorney General’s Office. In the very near future, your subdivision will need to begin the process of deciding
whether to participate in the proposed Settlements and subdivisions are encouraged to work through this process
well before the January 2, 2022 deadline to be an initial participating subdivision. Again, the Attorney General’s
Office, your counsel, and other contacts within the state are available to discuss the specifics of the Settlements
within your state and we encourage you to discuss the terms and benefits of the Settlements with them.

Third, monitor your email for further communications, which will include a Participation Agreement, Release,
(where applicable) a model Resolution, and instructions on executing and submitting electronically using
DocuSign.

We urge you to view the national settlement website and Arizona’s state-specific website at your earliest
convenience. Information and documents regarding the national Settlements and your state allocation can be
found on the settlement website at https://nationalopioidsettlement.com.

For further information, please contact Section Chief Leslie Kyman Cooper at Leslie. Cooper@azag.gov and
Unit Chief Matthew du Mée at Matthew.duMee@azag. gov.