Health

Johnson & Johnson ordered to pay $572M for fuelling Oklahoma's opioid crisis

An Oklahoma judge has found Johnson & Johnson and its subsidiaries helped fuel the state's opioid drug crisis and ordered the consumer products giant to pay $572 million US to help address the problem.

Purdue Pharma and Teva Pharmaceutical Industries previously settled multi-million dollar cases with Oklahoma

Johnson & Johnson was found liable Monday of fuelling an opioid epidemic in Oklahoma by deceptively marketing painkillers and was ordered to pay $572 million US. (Zeba Siddiqui/Reuters)

An Oklahoma judge has found Johnson & Johnson and its subsidiaries helped fuel the state's opioid drug crisis and ordered the consumer products giant to pay $572 million US to help address the problem.

Cleveland County District Judge Thad Balkman's ruling followed the first state opioid case to make it to trial and could help shape negotiations over roughly 1,500 similar lawsuits filed by state, local and tribal governments consolidated before a federal judge in Ohio.

"The opioid crisis has ravaged the state of Oklahoma," Balkman said, before announcing the verdict. "It must be abated immediately."

The award was well below what some investors and analysts feared, in what had been a $17 billion lawsuit viewed as a bellwether for other litigation nationwide over the opioid epidemic.

"The expectation was this was going to be a $1.5 billion to $2 billion fine," said Jared Holz, health-care strategist for Jefferies. "Five hundred and seventy-two million dollars is a much lower number than had been feared." It represents less than one per cent of the company's annual sales, which were $81.6 billion in 2018, according to its website.

Judge Thad Balkman, seen here during the trial in May, declared before his ruling that 'the opioid crisis has ravaged the state of Oklahoma.' (Chris Landsberger/Pool/Reuters)

Johnson & Johnson shares rose five per cent in extended trading following the decision. Shares of other drugmakers that sell opioid pain treatments, including Teva Pharmaceutical Industries Ltd. and Endo International Plc, also rose after hours.

Johnson & Johnson says it will appeal and seek to put payment of the award on hold during the appeal process.

Oklahoma argued the company aggressively marketed opioids for years in a way that overstated their effectiveness and underplayed the addiction risk.

A 'kingpin' company

Oklahoma previously reached a $270 million settlement with OxyContin-maker Purdue Pharma and an $85 million deal with Israeli-owned Teva Pharmaceutical Industries.

Oklahoma argued the companies and their subsidiaries created a public nuisance by launching an aggressive and misleading marketing campaign that overstated how effective the drugs were for treating chronic pain and understated the risk of addiction. Oklahoma Attorney General Mike Hunter says opioid overdoses killed 4,653 people in the state from 2007 to 2017.

Hunter has called Johnson & Johnson a "kingpin" company that was motivated by greed. He specifically pointed to two former Johnson & Johnson subsidiaries, Noramco and Tasmanian Alkaloids, which produced much of the raw opium used by other manufacturers to produce the drugs.

A worker stands next to a crushing machine in a warehouse at Tasmanian Alkaloids, a Johnson & Johnson subsidiary, which processes thebaine poppies, the main ingredient in slow-release pain medication, in this June 2014 photo. (David Gray/Reuters)

On Monday, Hunter said the Oklahoma case could provide a "road map" for other states to follow in holding drugmakers responsible for the opioid crisis.

"That's the message to other states: We did it in Oklahoma. You can do it elsewhere," Hunter said. "Johnson & Johnson will finally be held accountable for thousands of deaths and addictions caused by their activities."

"They've been the principal origin for the active pharmaceutical ingredient in prescription opioids in the country for the last two decades," Hunter said, after the trial ended July 15. "It is one of the most important elements of causation with regard to why the defendants … are responsible for the epidemic in the country and in Oklahoma."

'Flawed' decision

Attorneys for the company have maintained they were part of a lawful and heavily regulated industry subject to strict federal oversight, including the U.S. Drug Enforcement Agency and the U.S. Food and Drug Administration, during every step of the supply chain. Lawyers for the company said the judgment was a misapplication of public nuisance law.

Sabrina Strong, an attorney for Johnson & Johnson and its subsidiaries, said the companies have sympathy for those who suffer from substance abuse but called the judge's decision "flawed."

"You can't sue your way out of the opioid abuse crisis," Strong said. "Litigation is not the answer."

Oklahoma pursued the case under the state's public nuisance statute and presented the judge with a plan to abate the crisis that would cost between $12.6 billion for 20 years and $17.5 billion over 30 years. Attorneys for Johnson & Johnson have said that estimate is wildly inflated.

With files from Reuters and CBC News

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