Big Pharma flinches in opioids suits: a J&J loss in Okla. and a Sackler bid

brandjj-300x106Big Pharma has hit at least two pain points of potential significance as government officials and trial lawyers work to hold drug makers accountable for at least some of the carnage caused by prescription painkillers.

There’s still a far way to go before companies see a full legal reckoning in the civil justice system for opioid overdose deaths that have killed an estimated 400,000 Americans since 2007, as well the drugs causing tens of thousands of cases of suffering and addiction.

brandpurdue-300x170But Oklahoma officials have struck hard at pharmaceutical interests by winning a $572-million nuisance ruling from a state judge against Johnson and Johnson, a legendary and once-respected health care brand.

This legal landmark was followed by news that several drug makers — most notably the plutocratic Sackler family and their oxycodone-making firm Purdue pharmaceutical — may be ready to settle thousands of legal claims by paying billions of dollars and even giving up a business that has enriched them in almost unimaginable fashion.

Lots of ink and electrons have been spilled in excellent news articles and analyses. There are some key points to watch and take not of, though, in the two sizable developments in the nation’s opioid crisis.

Johnson and Johnson’s big bad day in court

J&J long has held itself out as a special, family-focused company in health care. Its much-promoted reputation collided with reality in the Oklahoma court, where the company not only became the big target of a state lawsuit but also the last defendant standing when two other firms, including Purdue and Teva, settled.

J&J has built a reputation in court of battling claims against it, though the company has run its court room record aground with significant losses in cases disputing “whether its talcum powder led to ovarian cancer, and high-profile [matters] over other potentially flawed products, like pelvic mesh and the anti-stroke drug Xarelto, which has caused excessive bleeding,” the New York Times reported.

In Oklahoma, J&J asserted that its opioid sales were low and that it had little legal culpability for deaths and injuries caused by prescription painkillers. The company pointed to other Big Pharma firms and said its activities with the powerful drugs were allowed and approved under the law.

But state officials pursued a different legal theory, arguing that the health care giant had created a public nuisance for which Oklahoma was owed $17 billion, so it could remedy the harms over the next two decades.

Why this approach? As Bloomberg news service reported:

“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.”

The New York Times reported that “Judge Thad Balkman of Cleveland County District Court, heartened lawyers representing states and cities — plaintiffs in many of the more than 2,000 opioid lawsuits pending across the country — who are pursuing [this nuisance] legal strategy.” The newspaper added:

“In his ruling, [the judge] 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 … Johnson & Johnson, which contracted with poppy growers in Tasmania, supplied 60% of the opiate ingredients that drug companies used for opioids like oxycodone, the state argued, and aggressively marketed opioids to doctors and patients as safe and effective. A Johnson & Johnson subsidiary, Janssen Pharmaceuticals, made its own opioids — a pill whose rights it sold in 2015, and a fentanyl patch that it still produces. Judge Balkman said the $572 million judgment could pay for a year’s worth of services needed to combat the epidemic in Oklahoma.”

So, with that smaller payment ordered, what message did Judge Balkman send? As the news and information site Axios reported:

“The judgment is less than 4% of J&J’s net profit from 2018, and significantly less than the $2 billion some Wall Street analysts expected J&J to end up paying — and that’s why shares of J&J and other related companies soared in after-hours trading. If this case is used as a benchmark in the national lawsuit, J&J likely would pay billions — but again, not an insurmountable amount for a company that brings in more than $80 billion of sales annually … J&J plans to appeal, saying in a statement the judge’s decision was ‘flawed’ and that it is ready to extend this fight into 2021.”

The Sacklers start to crumble?

In Cleveland, a federal judge has struggled for a while now to deal with thousands of lawsuits, consolidated in his court, and claiming that states, counties, cities, Indian tribes, and others have suffered costly harm due to the opioid abuse and overdose crisis. The federal judge lacks effective sway over actions like the case pursued in the state courts in Oklahoma.

But the timing of the western state decision may have worked for the many disputing parties, giving them a chance to see how various legal approaches might play out in court.

For companies lacking the deep resources of J&J, the Oklahoma suit may have spelled grim consequences ahead. Teva and Purdue settled rather than go to trial.

Then, after the J&J ruling was handed down, word began to leak out that Purdue and the Sackler family were negotiating a “global” settlement, an accord that would see them effectively give up their golden goose enterprise and as much as $12 billion to resolve thousands of suits against the firm. The New York Times described the complex corporate machinations that would occur, noting that the scoop about the talks was broken by NBC news:

“The bulk of the [settlement] funds would come from restructuring the company under a Chapter 11 bankruptcy filing that would transform it from a private company into a ‘public beneficiary trust.’ That would allow the profits from all drug sales, including the opioid painkiller OxyContin, to go to the plaintiffs — largely states, cities, towns and tribes. In addition, the company would give its addiction treatment drugs to the public without cost. Those drugs are currently under development and have received fast-track review status by the Food and Drug Administration. They include tablets to blunt opioid cravings and an over-the-counter nasal spray to reverse overdoses. The value of the profits from the new trust and the drug donations is estimated to total between $7 billion and $8 billion. In addition to their $3 billion cash payout, the Sacklers would sell another drug company they own, Mundipharma, and contribute an additional $1.5 billion from the proceeds.”

NPR reported that the Sacklers might be joined by Endo International, Allergan, and, yes, J&J in a negotiated settlement.

The talks are confidential, continuing, and uncertain as to their outcome. Axios, quoting NBC, again puts in perspective the possibility of a settlement for the Sacklers, who have seen their family history of philanthropy sacked by the opioid scandals, including embarassing revelations pouring forth from ProPublica and ABC news, based on files unsealed in a lawsuit by the medical and health news site Stat:

“The family is worth an estimated $13 billion, and Purdue made more than $35 billion from OxyContin sales…”

If the Sacklers, for example, walk away with their family name preserved, along with a chunk of their fortune, will that not only take care of medical and other needs of those harmed by opioids but also give angry plaintiffs a sense that they got justice for wrongs committed against them? Further complicating discussions about a fair and equitable settlement is the complexity of the Sackler fortunes, which already may be dispersed in hard to find and account for global holdings, the Associated Press reported.

Risky forecasting

In my practice, I see not only the harms that patients suffer while seeking medical services, but also the ordeals they may go through to start to try to be made whole through actions in the civil justice system, notably medical malpractice suits. Lawsuit can take time and resources, and the legal processes entailed with them can be daunting if not downright scary to those unfamiliar with the courts and the law.

A sense that wrongs will be not only recognized publicly but also remedied in some fashion can help sustain patients in long-running suits, especially complex matters involving large enterprises (whether they are big hospitals or Big Pharma firms). But plaintiff lawyers need to temper righteous optimism with realities, especially in difficult cases like those involving Big Pharma and opioids. Favorable court rulings can’t bring back the dead or easily fix those injured by addiction, pain, and the decline tied to opioid abuse.

And with large, complex cases, there inevitably will be — and already has been — disputes among the claimants. States already have argued in negotiations that they should hold first sway over any prospective settlements with awards, with their claims ahead of counties, who, in turn, say they have greater claims than do cities. Exactly how settlements get awarded and split up also can become divisive quickly, as Ohio is showing with the state officials battling over action in the legislature to empower the attorney general and the state to take over opioid-related lawsuits filed against Big Pharma by cities and counties.

The New York Times Editorial Board posted a piece worth reading, urging the officials and parties involved in opioid suits to keep at the fore the needs of real people with real injury. Settlements should go with high priority to treating opioid addiction and preventing abuses and overdoses, the newspaper said.

The nonprofit, independent RAND Corporation also has issued the results of its large study about fentanyl, a lab-made opioid that packs a wallop and has become a dangerous and lethal street drug. Fentanyl, the researchers warn, is a menace that constitutes a third phase of the opioid crisis, with prescription meds having been the first wave, opening the gateway to renewed abuse and damage from illicit drugs like heroin, methamphetamine, and cocaine. “Deaths involving synthetic opioids in the United States increased from roughly 3,000 in 2013 to more than 30,000 in 2018,” the researchers reported, adding that policy makers must move with urgency to find ways to get ahead of this next wave of the opioid crisis — or the chaos, death, and disease will only increase and worsen.

If there is a “global” settlement with Big Pharma over the prescription painkiller part of the opioid abuse and overdose crisis how much money also will go to awareness, education, and prevention program, including for threats like fentanyl?

The New York Times harkens to the path-breaking attempts to reach a comprehensive settlement with Big Tobacco over the disease, injury, and other damages associated with cigarette and cigar smoking. That 1998 accord involved 46 states, and, in two decades, payments of $125 billion from Big Tobacco to states. It also was marred by ineffective policies and abuses, the newspaper reported, noting:

“[T]wo decades later, only a fraction of the tobacco proceeds — less than 3% nationally in 2019 — has been spent on public health matters related to tobacco use. In New York, some of the money went to a public golf course. Alabama installed security cameras in its schools. And in North Carolina, a portion of the money was dedicated to subsidies — for tobacco companies. Today, no state finances tobacco control efforts at the level that the Centers for Disease Control and Prevention recommends.”

The newspaper editorial, which says an opioid settlement must be crafted and work better than this, also does not mention that, fundamentally, even a well-intentioned civil justice assault against a damaging product like tobacco may not alter the mendacity of business people who exploit the needs and cravings of their fellow human beings in the most craven ways possible.

Maria Szalavitz, an author who has written on addiction issues, wrote in a New York Times Op-Ed that J&J, doctors, and hospitals have misled too many about the painful picture of those who abuse drugs. Many may be “normal” folks, neighbors who had tooth extractions, got opioids, and got hooked. But may also are desperate souls, drug addicts, in pain, and not pretty:

“Drug companies like Johnson & Johnson twisted the truth about the potential risks of these medications. That caused great harm. Nonetheless, for many — including people with chronic pain or at the end of life — opioids are the only drugs that seem to work. Understanding the facts about these drugs is critical to resolving the crisis and making pharma pay for solutions that work. The reality is this: 80% of those who begin misusing prescription opioids are taking drugs obtained illegally — from theft, dealers, friends, relatives, the internet or other people’s medicine cabinets, not from doctors. And nearly three out of four young people who misuse opioids have previously taken cocaine or crack repeatedly. Indeed, researchers say that prior recreational drug use is a much larger risk factor for opioid addiction than medical exposure. That is not to say that there aren’t some whose addictions begin with a prescription — but this group is a decided minority. This shouldn’t deflect blame from the pharmaceutical industry — as Judge Balkman’s decision suggests, misleading marketing might have helped quadruple medical opioid sales from 1994 to 2006 in Oklahoma. Where those drugs ultimately went and who got harmed, however, is a more complex story than we’ve been led to believe.”

The Los Angeles Times a dozen years ago also warned that Big Pharma, Purdue, in particular, foresaw potential regulatory issues arising in this country, and, so the firms have sought new markets — and people — to exploit elsewhere around the globe. The independent, nonprofit Kaiser Health News service reported that the populous and increasingly wealth nation of India may be a place “ripe for misuse” of opioids. The New York Times reported that the Sacklers may drag their feet over a prospective settlement, partly to protect their options to sell addictive and destructive painkillers in lucrative overseas markets. Is the American opioid crisis something this nation proudly hopes to export to the detriment of the planet?

It’s worth noting that, even as officials grapple with big and complex drug lawsuits and potential settlements, Big Tobacco has morphed, too, in finding new ways to put products before the public that have proven harsh and injurious. In fact, the latest trend for the dark lords of tobacco is vaping and e-cigarettes, a product line so lucrative and alluring that two Big Tobacco giants — Philip Morris and Altria — are in merger talks to create a consumer products behemoth. Curious this, because a key aspect of this deal may rest in Altria’s hope to expand its Juul brand internationally, especially as this vaping market dominating product has run afoul of U.S. health regulators, notably in how vaping may harm kids.

We’ve got a lot of work to do to start to try to keep in check health harming megaliths like Big Pharma and Big Tobacco. It’s a never-ending fight.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
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