Yahoo Finance J&J Up Despite $572M Fine in Oklahoma Opioid Abuse Case
Shares of Johnson & Johnson JNJ were up 2.3% in after-hours trading on Aug 26, despite an unfavorable ruling in the lawsuit filed by the state of Oklahoma related to abuse of its opioid-based drugs — Duragesic, Nucynta and Nucynta ER.
The Cleveland County District Court has ordered the company to pay $572 million to the state of Oklahoma. However, the figure is much lower than Oklahoma’s demand of $17 billion to be paid over 30 years by J&J. Moreover, the company has decided to appeal against the ruling. The company is confident that its drugs were not responsible for the opioid crisis in the state and the ruling is inconsistent with the available facts and law. An appeal made by J&J is anticipated to extend the resolution of the lawsuit into 2021.
The company accepts that opioid abuse is a real problem but denies its role in the widespread use of opioid-based drugs in the Oklahoma state. The company claimed that its opioid analgesics were a tiny fraction of total sales from this class of drugs in Oklahoma. The company also stated that its drugs were Schedule II prescription opioid medicines, which are highly regulated through federal regulations and quotas.
J&J’s shares have decreased 1% so far this year compared with the industry’s decline of 2.8%.
Please note that two other companies — Teva Pharmaceutical TEVA and privately-held Purdue Pharma — were also accused by the state of Oklahoma for their involvement in opioid abuse. However, both the companies settled with the state of Oklahoma outside court earlier this year. While Purdue Pharma had to pay $270 million, Teva paid $85 million. But both companies denied any wrongdoing in the opioid abuse case. J&J’s fine and these settlement amounts are likely to be used to support the state’s initiatives for opioid addiction treatment and prevention programs
Meanwhile, another opioid maker Endo International ENDP reached settlements with the state of Ohio and certain other U.S. Districts, earlier this month, in lawsuits related to the abuse of branded and generic opioid medications. Allergan AGN too has reportedly settled cases related to its branded opioid drugs.
Meanwhile, a federal multidistrict litigation is scheduled in October, which includes several defendants and multifarious claims. Although J&J is looking to resolve these cases, which may include settlements, a similar ruling will be a burden for the company.
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J&J currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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