Today was a major loss for healthcare and pharmaceutical giant Johnson & Johnson (NYSE: JNJ). An Oklahoma judge ordered the company to pay out $572 million for contributing to the state’s ongoing opioid-addiction crisis. Over 2,000 cases were brought by local and state authorities in an attempt to hold drug makers, pharmacies, and distributors responsible for the widespread abuse of opioids, an issue that has been gaining traction since the early 2000s. The verdict is expected to be a hallmark case for other drugmakers which are now worrying that similar legislation could be leveled against them in the years to come.
While there has been plenty of legislation all across the country, backed by the increasing efforts of the Justice Department, Oklahoma’s case was the first to reach trial and ended up being focused on Johnson & Johnson specifically after two other drugmakers ended up settling their claims.
Judge Thad Balkman said that the state prosecutors have proved Johnson & Johnson had led a misleading marketing campaign to convince the public the opioids weren’t particularly addictive and were an excellent treatment option for those dealing with chronic pain. “The increase in opioid addiction and overdose deaths following the parallel increase in opioid sales in Oklahoma was not a coincidence,” said the judge according to The Wall Street Journal. Balkman went on to say that between 1994 and 2006, sales for prescription opioids had gone up fourfold, with there being over 326 million opioid pills having been dispensed in Oklahoma in 2015. In proportion to the population of the state, that figure would be enough for every adult citizen to have 110 opioid pills.
However, the total fines levied by the judge weren’t nearly as severe as they could have been. Balkman demanded Johnson & Johnson pay only for one year of abatement rather than the 20 or more years demanded by prosecutors. The judge also insisted that the $572 million fine should go to addiction treatment and services to prevent overdoses for those suffering from opioid addiction. While the company said that it would appeal the judgment, the ruling could have been much worse for Johnson & Johnson then it ended up being.
In response to the news, which made national headlines in all the major financial news outlets, shares of the company fell by 5 percent. Ending the day around $127.8 per share, the stock hit a new six-month low not seen since December 2018.
Johnson & Johnson Company Profile
Johnson & Johnson is the world’s largest and most diverse healthcare company. Three divisions make up the firm: pharmaceutical, medical devices and diagnostics, and consumer. The drug and device groups represent close to 80% of sales and drive the majority of cash flows for the firm. The drug division focuses on the following therapeutic areas: immunology, oncology, neurology, pulmonary, cardiology, and metabolic diseases. The device segment focuses on orthopedics, surgery tools, vision care, and a few smaller areas. The last segment of consumer focuses on baby care, beauty, oral care, over-the-counter drugs, and women’s health. Geographically, close to half of total revenue is generated in the United States. – Warrior Trading News
