Big U.S. drugmakers face a ‘flurry’ of suits

From Mike Natiounco (Bloomberg) Drug companies that have helped fuel the opioid epidemic by providing opioids for legitimate pain may soon be facing a flurry of lawsuits, according to a report from attorneys who…

Big U.S. drugmakers face a 'flurry' of suits

From Mike Natiounco (Bloomberg)

Drug companies that have helped fuel the opioid epidemic by providing opioids for legitimate pain may soon be facing a flurry of lawsuits, according to a report from attorneys who are suing the industry over the problem.

The litigation has now ballooned into hundreds of claims in state courts across the U.S., from communities seeking financial reparations for what they say was their opioid-infused loss of life to pharmaceutical giants facing damages claims for creating the epidemic.

Some of those companies may now be facing near-unprecedented losses from legal-adverse outcomes, and their lawyers are being urged to consider what should be done with all of the potential liabilities.

Though a single adverse legal event hasn’t quite followed suit with past losses for companies like Exxon Mobil Corp. or BP Plc., plaintiffs’ lawyers said several of the lawsuit targets have recently run into potentially catastrophic hurdles.

“These companies were making tremendous profit margins on opioids and now they are facing very significant legal downside,” said Joseph Bonavolonta, a plaintiffs’ lawyer from Baltimore who is defending a wide variety of defendants in a range of opioid litigation.

Exxon, BP, and Johnson & Johnson are among the companies facing claims from hundreds of state, local, and tribal governments over opioid-related conditions and conditions of care.

Such suits haven’t filed in recent months, with just four — Ohio, Michigan, Kentucky, and Pennsylvania — having made their lawsuits public. The numbers, however, speak for themselves: In the 11 months from January 2017 through September 2018, the four states filed 55 legal complaints. Two years prior, the states filed only five.

The J&J/Johnson & Johnson reaction has been telling. The company has for more than a decade faced lawsuits, settlements, and investigations surrounding its marketing of the painkiller acetaminophen, leading to more than $1 billion in potential costs, according to JP Morgan analysts and the company. J&J ended up taking the pill out of marketing the product.

But in the last year or so, drug companies have become embroiled in legal issues in more than one state, from Connecticut to California.

“If it’s something we don’t have controls for in the company, such as outsourcing, I think that’s a very sad, very expensive thing to do,” said Deborah Dugan, J&J’s chief legal officer, in an interview at her New York office.

With the first opioids litigation cases now set to go to trial in May in Ohio, some opioid companies may have discovered that past legal losses don’t necessarily translate to future successes.

Accumulating losses

BP has been criticized for waiting too long to address the environmental damage its oil-spill outages caused. Exxon paid $5 billion to settle a 12-year class-action suit following the 1989 Valdez tanker spill in Alaska.

Companies that survived those setbacks to be right back in the game. After one of the more frequent large settlements in the 1986 class-action case – for more than $400 million – Exxon’s market capitalization was at an all-time high. It lost nearly $900 million from the second payment, not including interest.

Johnson & Johnson, meanwhile, is also facing legal risks after it settled two fronts of litigation, to the tune of more than $3 billion. The drugmaker remains highly profitable and has in recent years avoided significant misconduct in government investigations.

Still, the company’s legal costs continue to mount. So far in 2018, the company has spent $1.13 billion in legal fees alone.

“To some extent, it’s learning from the past,” Dugan said. “But it’s also learning from what not to do moving forward.”

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