J&J stock jumps despite an unfavorable court ruling in a landmark opioid case…
On Monday, an Oklahoma judge ruled against Johnson & Johnson (J&J) in a landmark opioid case. According to the ruling, J&J is ordered to pay a $572 million fine for its role in the Oklahoma opioid epidemic. The hefty fine will be used to fund one year of costs under Oklahoma’s new plan to combat the current opioid crisis.
Although the fine is significant, it’s much less than the penalty that sought by Oklahoma. Attorney General Mike Hunter sought a fine of $17 billion, and the fine was expected to fall anywhere between $500 million and $5 billion. As a result, Johnson & Johnson’s stock increased by about 2% in after-hours trading.
Johnson & Johnson plans to appeal the decision on the basis that the risk of addiction to opioids is not as severe for drugs prescribed by a doctor.
Regarding the ruling, District Judge Thad Balkman stated, “The state meant its burden that the defendants Janssen and Johnson & Johnson’s misleading marketing and promotion of opioids created a nuisance as defined by [the law],” CNBC reports.
J&J Case Established New Precedent
The Johnson & Johnson verdict comes as the first ruling by states and local governments looking to hold pharmaceutical companies accountable for opioid abuse.
After the trial ended, Hunter stated, “They’ve been the principal origin for the active pharmaceutical ingredient in prescription opioids in the country for the last two decades.”
Johnson & Johnson has consistently downplayed its role in the opioid epidemic, but the state argued that J&J and its subsidiary, Janssen, have aggressively pushed its opioids to doctors since the 1990s.
Per the New York Times, J&J supplied 60% of the materials used to manufacture opioids in the U.S. while Janssen made its own opioid pills and fentanyl patches.
Oklahoma argued that the company created a public nuisance by downplaying the risk of addiction and overstating the effectiveness of the drugs in treating chronic pain.
Other Companies Under Fire
Johnson & Johnson isn’t the only pharmaceutical company being blamed for the opioid crisis. This ruling comes after Purdue Pharma and Teva Pharmaceutical settled with Oklahoma earlier this year for smaller fines. As part of the settlement, these companies admitted no wrongdoing, leaving J&J as the only company being blamed for the state’s opioid epidemic.
While the lingering effects of this ruling remain to be seen, many expect that the result of this case will help guide talks for the thousands of similar lawsuits filed by state and local governments.
J&J Will Appeal the Decision
Johnson & Johnson maintains that it doesn’t carry responsibility for Oklahoma’s opioid crisis and plans to appeal the court’s ruling.
In a statement, executive vice president and general counsel for J&J Michael Ullmann said, “Janssen did not cause the opioid crisis in Oklahoma, and neither the facts nor the law support this outcome. We recognize the opioid crisis is a tremendously complex public health issue and we have deep sympathy for everyone affected.”
Though the court’s decision may be damaging to J&J’s family-oriented image, Jefferies health-care strategist at Jared Holz said that the relatively insignificant penalty makes “makes owning J&J a little easier,” per CNBC.
