J&J, Teva Beat $50 Billion Opioid Case in First Industry Win (3)

Johnson & Johnson, Teva Pharmaceutical Industries Ltd. and other former opioid makers scored the pharmaceutical industry’s first win in the sprawling four-year litigation over the drugs, defeating a lawsuit by local governments in California that claimed they created a public-health crisis through misleading marketing.

Superior Court Judge Peter Wilson in Santa Ana on Monday rejected claims that units of J&J, Teva, Endo International Plc and Abbvie Inc.’s Allergan Plc duped doctors and patients about the addictiveness of opioid painkillers and created a so-called “public nuisance” tied to the medications. Officials in Los Angeles, Santa Clara and Orange counties and the city of Oakland sought as much as $50 billion to beef up policing and treatment budges depleted by the epidemic.

It’s the first time a judge or jury has rejected claims by states or local governments that ex-opioid makers should be held liable for the fallout from the U.S. opioid epidemic, which has claimed the lives of almost 500,000 Americans over the last two decades. Teva shares rose as much as 11% in Tel Aviv Tuesday.

“The court finds plaintiffs failed to prove an actionable public nuisance for which the defendants are legally liable,” Wilson concluded in a tentative ruling.

Lawyers for the local governments said they’ll ask a California appeals court to review the ruling.

“The people of California will have their opportunity to pursue justice on appeal and ensure no opioid manufacturer can engage in reckless corporate practices that compromise public health in the state for their own profit,” they said in a statement.

J&J said it’s pleased Wilson found its Janssen unit’s opioid marketing and promotion “were appropriate and responsible and did not cause any public nuisance,” according to a statement. John Hueston, a lawyer for Endo, said the judge properly found the company “did not make false or misleading statements, and Endo’s lawful conduct did not cause the widespread public nuisance at issue in plaintiffs’ complaint.”

Teva also praised the ruling, while saying the company recognizes that communities across the U.S. still suffer from the fallout of the opioid epidemic and need help.

“A clear win for the many patients in the U.S. who suffer from opioid addiction will only come when comprehensive settlements are finalized and resources are made available to all who need them,” the Israel-based drugmaker said in a statement.

Read More: J&J, Distributors Unveil $26 Billion Opioid Deal With States

The ruling marks a turn-around for J&J, which faced an Oklahoma judge’s 2019 ruling it spawned a public nuisance in the state through its opioid marketing. The judge ordered the New Jersey-based drugmaker to pay $465 million in reimbursement for tax dollars spent dealing with the social ills tied to the epidemic. The ruling is still on appeal.

While some pharmaceutical industry players, such as J&J, moved to set up global settlements of their opioid liabilities, the case brought by the California governments forward to trial.

J&J and the three largest opioid distributors in the U.S. have offered a $26 billion deal to wipe out more than 4,000 lawsuits filed by states and municipalities. That accord has yet to be finalized. Teva offered what it says is $23 billion worth of opioid-treatment medications, a valuation disputed by many states, cities and counties.

Lawyers for the local governments sought to persuade Wilson that opioid makers improperly flooded the state with 20 billion opioid dosages over the last two decades and duped doctors and consumers about the addictive nature of the pills. That led to increased dependence and overdoses and created a public nuisance.

The judge said, however, that the governments’ evidence of a dramatic increase in opioid prescriptions wasn’t enough to meet California’s test that a problem tagged as a nuisance is “substantial and unreasonable.” The municipalities didn’t produce evidence of “medically inappropriate” opioid prescriptions tied to the company’s allegedly deceptive marketing, Wilson said. He said the rise could have been tied to proper prescriptions for patients in pain.

“The court cannot conclude an increase in medically appropriate prescriptions can be a basis for public nuisance liability, even if undesirable consequences follow,” the judge wrote in the 42-page decision.

The case is Santa Clara v. Purdue Pharma LP, 30-2014-00725287, Superior Court for Orange County, California (Santa Ana).

(Updates with Teva shares in third paragraph)

To contact the reporter on this story:
Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editors responsible for this story:
Katia Porzecanski at kporzecansk1@bloomberg.net

Peter Blumberg

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