The reputation of Johnson & Johnson, the world’s largest healthcare company, is in the dock in Oklahoma, where a judge is expected to rule on Monday over claims that it sowed the seeds of the US opioid crisis.
It will be the first verdict on whether J&J’s sales of opioids and raw materials contributed to an epidemic described by the Oklahoma attorney-general in his opening remarks as the “worst man-made public health crisis in the history of this country and this state”. He is seeking up to $17bn to cover the cost of treatment, healthcare and criminal justice bills.
J&J — best known for consumer products such as “no more tears” baby shampoo — owns the Janssen pharmaceuticals business that sold two prescription opioids. Until 2016, it also owned units that farmed poppies and supplied the raw material to opioid makers including Purdue Pharma.
“J&J’s whole public persona and reputation is built as ‘family friendly’ and ‘we care about your health’. So they couldn’t really admit any of their products injure people,” said Carl Tobias, a law professor at the Richmond School of law. “They will appeal until they can’t appeal any more.”
The verdict comes as negotiations are under way that could lead to a settlement which many have compared to the $206bn deal with tobacco companies in the 1990s. The defendants — up to 22 opioid makers, distributors and pharmacies — are trying to establish a class that could enter talks with the almost 2,000 municipalities pursuing them. Even if those cases settle, the majority of states will still fight for compensation from opioid makers.
If J&J loses on Monday, it could open the door to more cases against the company and push others to settle sooner. While Purdue Pharma is considering bankruptcy, and fellow opioid maker Insys has already filed for Chapter 11, J&J’s much deeper pockets make it an attractive target for legal action.
Shares in J&J fell in May when the trial opened. The potential legal bills from opioid cases come as the company is battling lawsuits that claim its talcum powder caused cancer, which the company denies. The talc cases that J&J have lost have had their verdicts overturned, or are awaiting appeal.
If J&J wins, it may not be a true bellwether for the other cases. J&J’s opioid products only had a small market share in Oklahoma and the state is pursuing them purely on a “public nuisance” claim, whereas some other cases are relying on claims such as fraud.
J&J — which has a reputation as a tough litigator — was the only company in the dock after Purdue Pharma, owned by certain members of the Sackler family, settled with Oklahoma for $270m and Teva, an Israeli drugmaker, settled for $85m.
Elizabeth Burch, a professor at the University of Georgia School of Law said: “This is the first shot so everyone is looking at it to see how it goes, what it tells us about future lawsuits. But it is a pretty narrow case — it is just about J&J now Purdue and Teva settled out.”
Legal experts are divided on the likely success of Oklahoma’s central claim that J&J’s sale of opioids and the raw materials to create opioids caused a “public nuisance”.
The claim dates back to English common law and has been used, for example, to prosecute people who polluted a well, but it has not been used extensively in US states. A public nuisance claim was cited in the tobacco settlement, but it never went to court. Recently, a North Dakotan judge dismissed that state’s case against Purdue using the same legal strategy, but that sets no precedent for Oklahoma’s law.
John Sparks, Oklahoma counsel for J&J, said the state’s case relied on “an unprecedented expansion of public nuisance law” that was “misguided” and “legally unsustainable”.
Alexandra Lahav, a law professor at the University of Connecticut, said the claim might be hard to prove because J&J was a “very small piece of a very big problem”. Its two opioids accounted for less than 1 per cent of the opioid prescriptions in the state, so even if they were mismarketed, they could hardly have caused the crisis.
J&J denies they were mismarketed. “Not once did the state identify a single Oklahoma doctor who was misled by a single Janssen statement, nor did it prove that Janssen misleadingly marketed opioids or caused any harm in Oklahoma,” Mr Sparks said.
The state argued that J&J’s previous ownership of Noramco and Tasmanian Alkaloids, units which produced the active pharmaceutical ingredient in opioids and supplied to Purdue and Teva, made it a “drug kingpin”.
It exhibited a 1998 letter where a Noramco executive wrote to Frederick Pharmaceuticals, which later became Purdue, explaining they could not obtain such a large supply from any other company.
“If they have a role that made it possible for Purdue, why shouldn’t they be held accountable?” said Mr Tobias.
However, Ms Lahav believes that it will be hard to prove that J&J caused a public nuisance in such a highly regulated area, where the US Drug Enforcement Agency oversaw their work.
“There is no allegation that J&J behaved improperly in its production or distribution of its raw material,” she said. “I just don’t see J&J as the poster child or emblematic of the poster child in this crisis.”
If the state does manage to prove ‘public nuisance’, there will be a question about how much of the $17bn plan to abate the problem J&J should pay.
Lawyers for the state argue that Oklahoma’s law allows it to to pursue the company for the full bill, even if it shares responsibility. They point out that J&J could have come up with its own, presumably cheaper, abatement plan, or have pointed the finger at others who it felt were responsible for the crisis if it wanted to share the cost.
J&J says no Oklahoma court has ever awarded a cash abatement plan (rather than just requiring the problematic activity to be stopped) and the proposal bears no relationship to its products.
Whoever wins, the case is likely to go to appeal. But the initial verdict may have an impact in the court of public opinion, weighing on stocks of companies caught up in the other cases, pushing some management teams to settle and encouraging lawyers for states and municipalities to press ahead.
“A lot of that impact is going to depend on how well reasoned the judge’s opinion is. If it feels like it's a political decision . . . you will probably see it is not as influential in other proceedings. If it is well reasoned and seems to be more rigorous, even if people think it is wrong, it is likely to have a more significant impact in other jurisdictions,” said Ms Lahav.
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