Johnson & Johnson to appeal $572m fine for ‘misleading marketing’

The world's largest maker of healthcare products vowed on Tuesday to appeal an Oklahoma court ruling that it was liable for the costs of treating opioid addiction because of its "misleading marketing" of painkillers.

Johnson & Johnson was found liable in a landmark legal case of public nuisance through predatory marketing of its drugs and fined $572 million (€515 million).

"We have many strong grounds for appeal and we intend to pursue those vigorously," said Sabrina Strong, a lawyer for Johnson & Johnson.

Johnson & Johnson's stock got a boost from the lower-than-expected fine imposed on the company – Oklahoma state had sought as much as $17.5 billion to fund a 30-year programme – but shares of some other makers of prescription painkillers were getting battered on Tuesday. Teva and Endo International reversed initial gains to trade near recent lows as Wall Street came to grips with just how much the opioid crisis could cost the manufacturers of those drugs. The pair of companies along with Mallinckrodt are facing similar claims related to their role in the epidemic.

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As J&J extended Monday’s late session gains, shares of Teva fell as much as 7.3 per cent and remained down roughly 70 per cent in the last year. Endo fell as much as 10 per cent. Mallinckrodt shares declined 16 per cent, on pace to extend a now four-day losing streak, to trade at a record low.

While some investors were relieved that the company’s penalty wasn’t as high as feared lawyers for other US states, cities and counties could hardly contain their glee.

Nuisance statutes

More than 45 other states and 2,000 local governments are hoping to win billions of dollars in verdicts with the same arguments.

"Since all the other states and governments want to use their nuisance statutes against the opioid makers and distributors, it's not good news for the companies that this judge found it was a valid theory," said Richard Ausness, a University of Kentucky law professor who teaches about product liability.

Judge Thad Balkman, who heard the case – the first to go to trial – without a jury, ruled that J&J duped doctors into overprescribing its opioid-based painkillers, creating a public nuisance. In his ruling, he wrote that Johnson & Johnson had promulgated "false, misleading, and dangerous marketing campaigns" that had "caused exponentially increasing rates of addiction, overdose deaths" and babies born exposed to opioids.

The first federal cases targeting the marketing of opioid painkillers are set for a jury trial in Cleveland, Ohio in October. About 2,000 lawsuits out of some 2,500 filed nationwide are consolidated in the case in Cleveland.

Public health

Lawyers for municipalities hailed Judge Balkman’s ruling as progress in proving opioid makers and distributors created a US epidemic of addiction and overdoes.

“The ruling in favour of the state of Oklahoma’s public-nuisance claims confirms what communities have been saying for some time: the opioid epidemic significantly interfered with public health,” lawyers representing the cities and counties said in emailed statement.

The governments turned to the nuisance theory because it doesn’t require them to prove individual doctors were lured into overprescribing the opioid painkillers. Instead, they can use experts to show the companies’ marketing as a whole was deceptive and led to a jump in addictions and often-fatal overdoses.

Prof Ausness noted that Oklahoma’s nuisance statute was broadly written. States and local governments with more restrictive laws may find it more difficult to win opioid cases using a similar legal strategy, he said.

"This judgment is a misapplication of public nuisance law that has already been rejected by judges in other states," Michael Ullmann, J&J's general counsel, said in an emailed statement. "The unprecedented award for the state's 'abatement plan' has sweeping ramifications for many industries and bears no relation to the company's medicines or conduct." – Bloomberg