(Bloomberg) -- Teva Pharmaceutical Industries Ltd.’s move to pay $85 million to resolve an Oklahoma lawsuit alleging it and other drugmakers illegally marketed opioid painkillers, fueling a public health crisis, leaves Johnson & Johnson in the uncomfortable position of being the state’s sole target.
The settlement with Oklahoma’s attorney general, announced Sunday, came nearly on the eve of trial and followed a $270 million deal by Purdue Pharma LP in March to resolve identical claims over the marketing of its opioid-based OxyContin painkiller. The state alleged the three companies duped doctors into prescribing the powerful medications for unapproved ailments, causing fatal overdoses and drug-addiction woes.
Oklahoma is seeking at least $10 billion in damages and penalties for current and future outlays tied to the opioid epidemic. The trial is slated to be the first test of public-nuisance laws against opioid manufacturers and distributors. At least 42 states and more than 1,900 municipalities also have sued companies in the industry, demanding billions of dollars in damages.
J&J -- known for being loath to settle mass-tort litigation at the early stages -- so far hasn’t cut an out-of-court deal to end the case, set to set start May 28. Oklahoma Attorney General Mike Hunter has tagged the company as the “kingpin” of the opioid crisis because it once sold its own version of opioid painkillers as well as the active ingredient.
“J&J is probably feeling pretty lonely right now as the Oklahoma case gets ready to go,” Jean Eggen, a law professor at Widener University’s Delaware Law School who teaches about mass torts. “Being left as the only defendant in one of these high-profile cases is a really ugly position to be in.”
Andrew Wheatley, a spokesman for J&J and its Janssen unit, said Sunday the drugmaker was ready to defend itself at trial from Oklahoma’s claims that its painkillers caused a public nuisance in the state. Hunter contends J&J’s illegal marketing created a nuisance that forced the state to spend hundreds of millions of dollars to address the societal fall-out of opioid-related overdoses and addictions.
Read more: U.S. Life Expectancy Takes an Opioid Hit
“We disagree with the state’s overly expansive theories of public nuisance law, which should not apply in this situation,” Wheatley said in an emailed statement. “At the same time, as with all litigation, if an appropriate resolution is possible that avoids the expense and uncertainty of a trial, we are always open to that option.”
Hunter said in a statement it would take two weeks to finalize Teva’s settlement, and the $85 million would be used to address the costs of the state’s “opioid crisis.” He added the state was ready to proceed against New Brunswick, New Jersey, based J&J alone.
Officials of Petach Tikva, Israel-based Teva said they didn’t admit to any wrongdoing in connection with the settlement and only resolved the case out of a desire to help “people who have suffered from abuse of opioids and to help stop the effects of the opioid crisis.”
Teva officials also may have been concerned they could be left on the hook for a multi-billion-dollar judgment, along with J&J, once Judge Thad Balkman rules in the case, Eggen said. Balkman is hearing the case without a jury.
“There’s a lot of pressure on these companies right now, litigation pressure, government pressure and political pressure,” Eggen said. “Settlement is the easy way to get out from all that pressure.”
Eyes on Cleveland
There may be other settlements later this year as the focus on opioid litigation shifts to Cleveland, where a federal judge has set two test trials for October to allow juries to consider public-nuisance claims over drug-marketing campaigns, said Carl Tobias, a University of Richmond law professor who teaches as product-liability cases.
U.S. District Judge Dan Polster is overseeing more than 1,900 suits filed by U.S. cities and counties seeking recoup tax dollars spent fighting the opioid epidemic. Polster unsuccessfully sought to push the companies and local governments into settling and then set the test trials to get the case moving.
“Nothing focuses the mind on settling better than a looming jury trial,” Tobias said in an interview. “I wouldn’t be surprised if we saw some settlements in the months leading up to the Cleveland cases since its generally easier and cheaper to do that early rather than days before the trial begins.”
In Sunday trading on the Tel Aviv Stock Exchange, Teva’s shares reached their lowest since April 2000.
The case is State of Oklahoma v. Purdue Pharma LP, CJ-2017-816, Cleveland County, Oklahoma, District Court (Norman).
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