Johnson & Johnson fined in landmark case for its role in US opioid crisis

Shares of the US drug maker rose 5.5% after the ruling as analysts had expected a higher cost of reparation

The US healthcare giant Johnson & Johnson was fined $572 million (Dh2.1 billion) for its role in fuelling Oklahoma state's opiod addiction crisis. AP

US healthcare giant Johnson & Johnson was fined $572 million (Dh2.1 billion) for its role in fuelling Oklahoma’s opioid addiction “crisis” that caused thousands of deaths, a judge ruled in a landmark decision for the American judiciary.

Despite the penalty, shares of the drug maker rose as much as 5.5 per cent on the New York Stock Exchange yesterday. Investors were buoyed after the company took less of a hit than expected in the ruling. Analysts had expected a fine of around $2bn.

The case was the first to go to trial out of the 2,000 lawsuits against pharmaceutical companies and distributors, filed by state and local governments seeking compensation for the opioid issue. The problem has caused nearly 400,000 deaths in the US between 1999 and 2017, with 6,000 reported in Oklahoma alone.

Calling Johnson & Johnson an opioid "kingpin", lawyers said its marketing strategy led doctors to overprescribe drugs, which caused a surge in deaths by overdose in Oklahoma.

"We showed how the company repeatedly ignored warnings by the federal governments and its own scientific advisers about the dangers of its drugs and the risks of marketing its products the way it did," said Oklahoma attorney general Mike Hunter.

“We have proven that Johnson & Johnson has built its billion dollar brand out of greed and on the backs of pain and suffering of innocent people,” he said.

Johnson & Johnson argued that its marketing claims had scientific support and its painkillers accounted for a tiny fraction of opioids prescribed in Oklahoma.

"The decision in this case is flawed. The state failed to present evidence that the company's products or actions caused a public nuisance in Oklahoma," the company wrote on its website after the ruling.

Johnson & Johnson also said it would appeal the decision.

During the verdict, Judge Thad Balkman of Cleveland County District Court in Norman, Oklahoma, said prosecutors had demonstrated that Johnson & Johnson contributed to a “public nuisance” in its deceptive promotion of highly addictive prescription painkillers.

"Those actions compromised the health and safety of thousands of Oklahomans. The opioid crisis is an imminent danger and menace to Oklahomans," Judge Balkman said.

The payment would be used for the care and treatment of opioid addicts, he said.

Shares of other drug makers that sell opioid painkillers and are defending against similar lawsuits also rose after-hours, including Teva Pharmaceutical Industries and Endo International.

“The market will extrapolate this as a positive to the other opioid-related stocks,” Wells Fargo analyst David Maris wrote in a note to investors.