On Monday, an Oklahoma judge ruled that Johnson & Johnson (NYSE: JNJ) will pay $572 million for playing a part in the state’s opioid crisis. The company produces the painkillers Duragesic and Nucynta.
This decision by Cleveland County District Judge Thad Balkman is huge and has become one of the first decisions made that’ll hold a drugmaker culpable for the years that opioids were handed out without a second thought in the late 1990s. This liberal dispensing of the drugs could be linked to the nationwide opioid epidemic that continues to cause thousands of deaths and addictions.
More than 400,000 people have died of overdoses from painkillers, heroin, and illegal fentanyl since 1999.
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Judge Balkman said:
The opioid crisis has ravaged the state of Oklahoma and must be abated immediately. As a matter of law, I find that defendants’ actions caused harm, and those harms are the kinds recognized by [state law] because those actions annoyed, injured, or endangered the comfort, repose, health, or safety of Oklahomans.
Oklahoma is the first state to have a case like this go to trial. More than 40 states are pursuing similar claims against the pharmaceutical industry. The state’s attorneys were seeking $17.5 billion over 30 years for treatment, emergency care, law enforcement, social services, and other addiction-related needs. Judge Balkman didn’t believe that it would cost $572 million to address the crisis in the first year considering what was laid out in the state’s plan.
Johnson & Johnson disagreed with the judge’s decision, saying:
We have sympathy for those who suffer from opioid use disorder, but Johnson & Johnson did not cause the opioid abuse crisis here in Oklahoma or anywhere in this country.
The company plans to appeal the decision.
Oklahoma Attorney General Mike Hunter wrote:
[Johnson & Johnson’s] marketing scheme was driven by a desire to make billions for their pain franchise. To do this, they developed and carried out a plan to directly influence and convince doctors to prescribe more and more opioids, despite the fact that defendants knew increasing the supply of opioids would lead to abuse, addiction, misuse, death, and crime.
The $572 million in damages that Johnson & Johnson has to pay only amounts to 3.7% of the company’s net profit for 2018. The major conglomerate won’t be significantly impacted financially by this fine, but that doesn’t mean the company won’t do anything to fight the court’s decision. After all, Johnson & Johnson calls itself a “family company.” It wouldn’t want to tarnish its reputation now or down the road. The ruling didn’t seem to negatively affect share prices on Monday. Johnson & Johnson’s stock increased more than 5% in aftermarket trading, which is a little bizarre.
This decision will help pave the way for future legal fights against other pharmaceutical companies that played a role in the opioid crisis. According to the Department of Health and Human Services, 130 people, on average, die every day from opioid-related overdoses. It was time that someone or some company be held responsible. In this instance, it wasn’t the ruling that the state was hoping for, but it was a start.
This trial has the public even more involved, putting more attention on big pharmaceutical companies for the foreseeable future, which could significantly impact investors’ feelings towards these massive entities.
Until next time,
Jennifer Clark
Pro Trader Today