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Update: J&J to appeal $572M verdict in Oklahoma opioid case

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Update: J&J to appeal $572M verdict in Oklahoma opioid case

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Judge Thad Balkman issues his decision in an opioid lawsuit against pharmaceutical giant Johnson & Johnson in Norman, Okla., Aug. 26.

Source: The Associated Press

An Oklahoma judge ruled that Johnson & Johnson must pay $572 million in a suit brought by the state that accused the pharmaceutical juggernaut of engaging in aggressive marketing of its painkillers, which contributed to the U.S. opioid epidemic.

Oklahoma attorneys had asked that the company pay $17.5 billion over the course of 30 years to assist the state in addressing addiction and prevention. The Johnson & Johnson and its pharmaceutical division Janssen were ordered to pay a total of $572,102,028.

Judge Thad Balkman of the Cleveland County District Court said the funds would go toward an "abatement plan" to account for the needs of the state to address the crisis.

"My judgment includes findings of fact and conclusions of law that the state met its burden," Balkman said. "That the defendants Janssen and Johnson & Johnson's misleading marketing and promotion of opioids created a nuisance ... including a finding that those actions compromised the health and safety of thousands of Oklahomans."

Balkman added that "the proper relief for public nuisance is equitable abatement."

"This opioid crisis has ravaged Oklahoma — it must be abated," the judge said.

Shares of Johnson & Johnson were up 4.2% to $133.20 after hours at 4:10 p.m. ET immediately following the judge's ruling. The company said it would appeal the decision.

"Janssen did not cause the opioid crisis in Oklahoma, and neither the facts nor the law support this outcome," Johnson & Johnson Special Counsel Michael Ullmann said in a release.

Ullman said the court's decision was flawed according to the facts and the law, particularly in its use of public nuisance law.

"This judgment is a misapplication of public nuisance law that has already been rejected by judges in other states," Ullmann said. "The unprecedented award for the state's 'abatement plan' has sweeping ramifications for many industries and bears no relation to the company's medicines or conduct."

Cowen analyst Joshua Jennings said the appeal would go to the Supreme Court of Oklahoma, with an outcome unlikely to arrive before mid-2021.

The ruling in the Oklahoma civil suit is the first in a string of lawsuits filed by states suing pharmaceutical companies for their role in the opioid epidemic. This trial began at the end of May and wrapped mid-July and could prove to be a bellwether for the remaining cases.

Jennings cautioned investors from using the Oklahoma trial as a litmus test for future outcomes.

"We would be cautious on the read-through of the Oklahoma verdict as our legal consultants have harped on the weakness of the public nuisance argument being applied to the opioid crisis," Jennings said in a note following the ruling. "Although the state of Oklahoma ruled that the public nuisance argument was valid, we believe there is risk to the verdict being held up during the appeals process as well as risk that a public nuisance argument will be successful in other state litigation and the multidistrict litigation process."

The lawsuit, originally levied against multiple defendants in 2017 by Oklahoma Attorney General Mike Hunter, included Purdue Pharma LP and Teva Pharmaceutical Industries Ltd., but those companies settled with the state for $270 million in March and $85 million in May, respectively.

Johnson & Johnson was the only company that continued with the trial in Oklahoma to face allegations that it "executed massive and unprecedented marketing campaigns through which they misrepresented the risks of addiction from their opioids and touted unsubstantiated benefits."

The suit alleged that the marketing behavior constituted a public nuisance, a strategy stemming from large settlements reached during tobacco litigation in the 1990s. Johnson & Johnson has denied all wrongdoing.

At the time the suit was filed, Hunter said Oklahoma ranked No. 1 in the nation in milligrams of opioids distributed per adult resident.

"Our case has revealed how corporate greed got in the way of responsible practices by Johnson & Johnson and its subsidiaries," Hunter said in July. "Our evidence has shown how the company perpetuated the epidemic through the targeting of high-prescribing doctors, repeatedly ignoring warnings to clean up its act by the federal government and its own scientific advisers and the myriad of other deceitful practices on its way to selling more highly addictive drugs to a vulnerable population."