Oklahoma Judge Rules Against Johnson & Johnson, Orders $572m Payment to State

On Monday, Cleveland County, Oklahoma, District Court Judge Thad Balkman ruled that Johnson & Johnson subsidiary Janssen Pharmaceuticals sparked the state’s opioid crisis by deceptively marketing opioid products, ordering the company to pay the State of Oklahoma $572 million. The amount ordered by the judge fell well short of the $17.5 billion initially sought by Oklahoma to pay for addiction treatment, drug courts, and other opioid-related harm services needed over the next 20 years to address damages caused by the epidemic.

Still, the landmark case was the first court ruling holding a pharmaceutical company responsible for one of the worst drug epidemics in U.S. history. After a seven-week civil trial, Judge Balkman determined in his ruling that Johnson & Johnson had promulgated “false, misleading, and dangerous marketing campaigns” that “caused exponentially increasing rates of addiction, overdose deaths, and neonatal abstinence syndrome in Oklahoma.” Between 2015 and 2018, 18 million opioid prescriptions were issued in the state with a population of 3.9 million. Since 2000, approximately 6,000 Oklahomans have died from opioid overdoses.

In his ruling, Judge Balkman indicated the $572 million judgement could pay for only one year’s worth of services needed to combat the opioid epidemic after determining the state did not present sufficient evidence of the amount of time and costs necessary beyond year one to abate the state’s opioid crisis.

Immediately following the ruling, Johnson & Johnson representatives announced their intent to appeal, stating that, “Janssen did not cause the opioid crisis in Oklahoma, and neither the facts nor the law support this outcome.” Despite its share of opioid sales in the state being only 1 percent of the market, Johnson & Johnson sales staff between 2000 and 2011 made nearly 150,000 visits to physicians in Oklahoma, focusing primarily on high-volume prescribers. The company also supplied most of the nation’s opioid material to other drug manufacturers, refined by Johnson & Johnson from poppy the company developed and grew in Tasmania. During the civil trial, Johnson & Johnson argued blame for the epidemic could not be placed squarely on one company with modest sales and whose drugs were approved and regulated by state and federal entities.

However, Judge Balkman indicated he was persuaded by Oklahoma’s legal theory in that Johnson & Johnson created a “public nuisance” by substantially contributing to an ongoing public health crisis. While the judgement amount fell short, Oklahoma officials lauded the broader sum of funding ordered payable to the state by opioid manufacturers. Recall, earlier this year Perdue Pharma and Teva Pharmaceuticals settled with the State of Oklahoma and agreed to pay $270 million and $85 million, respectively, for their roles in the state’s opioid crisis.

The Oklahoma case was closely monitored by opioid manufacturers, distributors, and retailers as they face more than 2,000 similar lawsuits brought by state and local governments throughout the country. Settlement negotiations may quicken between pharmaceutical industry defendants and two large plaintiffs groups following the Oklahoma ruling. One group of plaintiffs is representing thousands of counties and cities, which is set to be argued through a consolidated case in an Ohio federal court, and another group of plaintiffs is a coalition of states. The consolidated Ohio case against 22 opioid manufacturers and distributors is anticipated to begin in October. A number of states have also filed separate lawsuits against pharmaceutical companies, including California.

It remains to be seen how outstanding legal challenges will play out throughout the country, particularly given the potential for clashes between states and local government plaintiffs. Many local government plaintiffs have been pushing for the consolidated Ohio case to include a “negotiating class” of thousands of additional local governments. According to these local entities, this arrangement would allow them to more effectively distribute any settlement funds at the local level. Many state attorneys general, however, are opposed to the local government negotiating class arrangement, even going so far as to file amicus briefs with the Ohio court arguing against it.

Given the Oklahoma ruling, as well as the mounting legal challenges against the industry, a number of pharmaceutical companies, including Perdue Pharma, Johnson & Johnson, Endo International, and Allergan, are reportedly aiming to cut deals with plaintiffs through global settlements with both state and local governments in the near future. Reports suggest that Perdue Pharma, for instance, may settle in a deal involving $12 billion in payments to state and local governments and a bankruptcy process that would involve the Sackler family conceding ownership of the company. While concrete details are yet to emerge, court proceedings and potential settlements with state and local governments – which may reach amounts and mimic provisions similar to those of the 1998 Master Tobacco Settlement – are expected to unfold over the coming weeks and months.