New York’s Department of Financial Services filed suit against Johnson & Johnson on September 17, 2020. The suit alleges significant insurance fraud related to Johnson & Johnson’s negligent promotion of opioids despite the company knowing the risks the drugs posed.

The suit joins another high profile opioid case from the New York Attorney General’s office against Johnson & Johnson and its Janssen pharmaceutical subsidiary, among other giants in the industry. That suit similarly alleges the company “deliberately betrayed” their duty to prevent the misuse of addictive opioids through a “persistent course of fraudulent and illegal misconduct in order to profiteer from the plague they knew would be unleashed”. The court date for this suit continues to be delayed as a result of the COVID-19 pandemic.

Though much of the evidence for both suits overlaps, primarily focusing on the fraudulent marketing of Nucynta and Duragesic to prescribing doctors and elderly patients, the Department of Financial Services case quantifies the cost of these drugs to insurers and the insured.

“From 2007 to 2014, for example, private insurance claims related to opioid dependence diagnoses rose more than 3000% nationally, and nearly 500% in New York State. Over just the past 10 years, the dramatic rise in additional claims paid by commercial health insurers in the State of New York as a direct result of the opioid crisis led to, in turn, New York consumers of commercial health insurance overpaying an estimated $1.8 billion in premiums.” The suit argues these costs are directly related to Johnson & Johnson’s misrepresentation of the addictiveness of their products. The company effectively used addiction to ensure a pipeline of never ending consumers.

The alleged misrepresentation of the drugs violated two New York insurance laws. The laws carry fines of $5000 per violation, and the state hopes to recover $2 billion from Johnson & Johnson.

Resources Cited In This Article:

New York State Department of Financial Services: Statement of Charges and Notice of Hearing

New York Attorney General's Lawsuit

N.Y. postpones opioid bellwether trial as novel coronavirus concerns spread

NY regulator sues Johnson & Johnson for insurance fraud over opioid claims

New York Charges J&J with Civil Insurance Fraud in Opioid Industry Probe

Decision sets the stage for a new trial for punitive damages

The Pennsylvania Supreme Court shot down Johnson & Johnson’s last ditch effort to avoid a $76 million judgement in the ongoing Risperdal litigation. Lawsuits filed on behalf of thousands of boys allege that Johnson & Johnson misrepresented the risk of gynecomastia as a side effect, and that the company illegally marketed the drug off-label to children. Gynecomastia is the development of female breasts in boys.

According to Law360, an earlier ruling in Pennsylvania's Superior Court declared: "[Yount] was just 4½ years old when first prescribed Risperdal, and he has never since known life without gynecomastia. At sixteen years of age when the jury considered its award, [Yount] was living with severe and permanent disfigurement. The undisputed record confirms he has been routinely bullied and teased by peers and is too humiliated to ever remove his shirt in recreational or social situations where it would be customary for boys to do so when enjoying ordinary pleasures of youth."

In July of 2016, after a weeks long trial, the jury awarded plaintiff Andrew Yount $70 million, declaring that the J&J subsidiary was “. . .negligent by failing to provide an adequate warning to Andrew’s healthcare providers about the risk of gynecomastia from taking Risperdal.” They also found “negligence a substantial factor in bringing about Andrew Yount’s gynecomastia,” and they found Johnson & Johnson’s subsidiary did “intentionally falsify, destroy or conceal records containing material evidence in this case.”

On August 10, 2016, the judge in the case added delay damages in the amount of $6,661,027.40, bringing the final judgement to $76,661,027.40. In an order dated June 20, the Court entered an opinion supporting the jury’s verdict, stating “the record contains material evidence to support the jury’s verdict of seventy million dollars.” (Page 92)

In the subsequent four years, Johnson & Johnson has exhausted its appellate remedies. Moreover, thanks to a September of 2018 Superior Court of Pennsylvania ruling, Yount’s case is destined to return to court, this time to decide punitive damages. The ruling reversed a lower Court decision that prevented plaintiff’s from seeking punitive damages. The first and only Risperdal case yet to reach verdict for punitive damages resulted in an $8 Billion jury verdict in October 2019.

Johnson & Johnson reported 11,900 Risperdal claims in their 2020 10K filing.

Johnson & Johnson finalized a deal to acquire Momenta Pharmaceuticals for $6.5 billion, the largest drug industry merger this year. Momenta’s stocks soared 69.2%, nearly reaching the $52.50 per share appraisal Johnson & Johnson is paying. Over the course of the previous year, Momenta stock had already seen gains of nearly 200%, though some analysts this summer were wary of the company’s cash burn, labeling it “essentially still a development-stage biotech.”

Johnson & Johnson, however, forecasts big money in the near future. Momenta’s primary selling point is its flagship drug called Nipocalimab, currently in late stage research for various autoimmune conditions. According to Johnson & Johnson, Nipocalimb could see billions in annual sales once it wins approval.

Johnson & Johnson is leaving behind lawsuit-ridden or low-performing divisions to pursue the highly lucrative frontier of drug treatments for autoimmune diseases. Nipocalimb is potentially just a small indicator of Momenta’s potential, and Johnson & Johnson sees the economic potential of investing in drugs and companies working in autoimmune diseases. The global autoimmune treatment market is forecast to double from 3.28 billion dollars in 2017 to 7.95 billion by 2025 and already accounts for the world’s best selling drug, Abbvie Inc’s Humira.

Johnson & Johnson was so eager to acquire Momenta, they borrowed $7.5 billion to fund the purchase. According to Moody Investors Service, “the higher leverage incurred to fund the purchase is expected to affect the pharmaceutical giant’s ability to pay for the liabilities arising from litigation related to the talc and opioid cases.” It remains to be seen if Momenta will be able to uphold their value of “absolute integrity” as they begin their partnership with Johnson & Johnson, “unwavering in [their] convictions to do what is right, even when there is pressure to do otherwise.”

Articles Referenced in This Post:

Johnson & Johnson buying Cambridge biotech Momenta for $6.5b"Johnson & Johnson buying Cambridge biotech Momenta for $6.5b

Here's Why Momenta Pharmaceuticals Dropped 13.5% Today

J&J strikes $6.5 billion deal for autoimmune disease specialist Momenta

Global Autoimmune Treatment Market

Johnson & Johnson Borrows $7.5B to Fund Its Purchase Of Momenta

Momenta Mission Statement

A three-judge panel in Johnson & Johnson’s home state of New Jersey declared two plaintiffs could present expert testimony in court -- evidence that supports claims the company’s signature Baby Powder contained cancer-causing asbestos. The New Jersey Superior Court passed down the decision on August 5, ending a lengthy debate regarding the validity of the testimony and its admissibility in trial and effectively reinstating the two women’s cases, clearing the way for over 1,000 similar cases against Johnson & Johnson in the state. The decision comes as a blow to Johnson & Johnson who is thought to have consolidated much of their Baby Powder litigation into New Jersey hoping for home-court advantage.

A lower court had previously ruled against allowing the testimony, describing it as “made-for-litigation.” The Superior Court panel found the lower court assessed the experts’ evidence in relation to his own understanding of science rather than evaluating the soundness of their methods and data in accordance with views of the scientific community.

Plaintiffs view this decision as a major victory towards uncovering Johnson & Johnson’s decades-long suppression of competing scientific evidence. According to The New Times, “Johnson & Johnson has often said that faulty testing, shoddy science and ill-equipped researchers are to blame for findings that its powder was contaminated with asbestos.”

The company pulled the product from the shelves in North America in May citing a slump in demand due to “misinformation about the product”, but they “remain confident that [their] talc is safe, asbestos free and does not cause cancer.” Consumers disagree, as Johnson and Johnson recently reported a 15% increase in lawsuits carrying them to more than 20,000 claims.

Articles referenced in this post:

J&J Stung by New Jersey Court Ruling Reviving Talc Cancer Claims

Johnson & Johnson’s talc phase-out seen as possible prelude to settling lawsuits

Expert Ruling Was 'Tipping Point' for J&J's Talc Withdrawal, Lawyers Say

J&J’s Baby Powder Switch Sets an End Date for Legal Liability

Johnson & Johnson aims to torpedo thousands of talc cases with one high-stakes hearing

Judge called asbestos testimony 'made-for-litigation,' but N.J. appeals court says it is good enough for courtroom

NJ Appeals Court Says Plaintiffs' Experts in J&J Talc Suits Met 'Accutane' Standard for Scientific Evidence

Johnson & Johnson Says Its Coronavirus Vaccine Could Be Ready Early Next Year

March 30, 2020 -- This article discusses the recent efforts by J&J to develop a coronavirus after being contracted by the US government to develop vaccines.

Johnson & Johnson coronavirus vaccine could scale up to a billion doses by end of 2021: CEO

March 31, 2019 -- This article discusses how J&J is working with Beth Israel Deaconess Medical Center to start picking people to test a new coronavirus vaccine on.

"This would ordinarily take about five years, but as we all know these are very different times," Gorsky said. "We've got a team of scientists literally working around the clock since January."

Johnson & Johnson CEO on the race to make a coronavirus vaccine

March 31, 2020 -- This article includes comments from Alex Gorsky about what J&J is doing to develop a coronavirus vaccine.

Johnson & Johnson CEO on how close company is to coronavirus vaccine

March 30, 2020 -- This video shows Alex Gorsky discussing J&J vaccine development efforts on Squawk Box.

Johnson & Johnson CEO on potential coronavirus vaccine: 'I think we'll have important data by the end of the year'

March 22, 2020 -- This is an article about Alex Gorsky and his impressions on coronavirus and the ability to create a vaccine. This interview with Gorsky discusses the science behind finding a vaccine, company efforts and J&J supply chains.

“Right now, we are making very significant investment, somewhat at risk, knowing that we need to have adequate supply in parallel with knowing that the vaccine actually works,” he said.

When Bartiromo asked Gorsky if he was willing to take his supply chain entirely back to America instead of relying on China for active ingredients in prescription drugs, he responded, “I think the facts are that most of the large companies now have large global integrative supply chains.”

Johnson & Johnson's Coronavirus Vaccine Won't Be in Clinical Trials Until November

March 18, 2020 -- This article discusses how J&J doesn’t have a valid vaccine candidate for coronavirus and appears to be falling behind other companies in the race to find a vaccine. 

“Big old Johnson & Johnson (NYSE:JNJ) The healthcare conglomerate doesn't even have a candidate yet.”

“The company started working on a vaccine in January but only expects to have a candidate picked out by the end of this month, according to an interview with Johnson & Johnson's chief scientific officer, Paul Stoffels, on CNBC.”

Beth Israel is working with Johnson & Johnson on a coronavirus vaccine

March 12, 2020 -- This article discusses a partnership between J&J and Beth Israel Medical Center in the search for a coronavirus vaccine.  

“Beth Israel and Janssen have collaborated for more than a decade on vaccine programs for other illnesses, including Zika virus disease and HIV. They signed an agreement to work together on coronavirus on Jan. 31, Barouch said, just three weeks after Chinese scientists sequenced the genome of the virus and posted it online. Financial terms haven’t been disclosed.”

March 30, 2020 -- This article discusses the contract between the US Government and JNJ and Moderna Inc in the hunt for a coronavirus vaccine. 

“On Monday, J&J announced a $1 billion deal with the U.S. government to create enough manufacturing capacity to make more than 1 billion doses of a vaccine, and its shares closed up 8% at $133.01.”

Read the article at Reuters: J&J, Moderna sign deals with U.S. to produce huge quantity of possible coronavirus vaccines

March 30, 2020 -- Forbes reports on the half billion dollar grant to J&J to create develop the COVID-19 vaccine.

That’s according to a $456 million order with Johnson & Johnson’s Pharmaceuticals arm Janssen, which specified a “new vaccine asset for 2019 Novel Coronavirus (COVID-19),” Forbes found. It’s the largest reported amount spent on a vaccine project to date, even though the pharma giant hasn’t yet started any clinical trials as other firms have.

Read the article on Forbes: The U.S. Just Signed A $450 Million Coronavirus Vaccine Contract With Johnson & Johnson

March 31, 2020 -- This article discusses efforts by J&J to create a coronavirus vaccine.  According to this article J&J is expecting to start testing the vaccine in September and would be able to start mass producing the vaccine soon after.

Read the article on BusinessInsider.com: The top scientist at J&J told us how the $350 billion pharma giant will have a coronavirus vaccine ready at 'warp speed', then pump out 1 billion doses

March 31, 2020 -- This article discusses the partnership between J&J and the Department of Health and Human Services are working to help Janssen division complete a coronavirus vaccine. Researchers seem hopeful but are worried that putting too many resources into one company can be dangerous.

Read the article on ScienceMag.org: The $1 billion bet: Pharma giant and U.S. government team up in all-out coronavirus vaccine push

April 14, 2020 -- This is a new release from J&J discussing a partnership with journalist Lisa Ling.  The partnership is for an 8 part podcast called a The Road to a Vaccine.  The podcast will be led by Lisa Ling and will talk to doctors and scientists and document actions being taken to find a vaccine for Covid-19.

“Each week our host Lisa Ling will talk to leading scientists and researchers, healthcare workers on the front lines and public health experts around the world working collaboratively to bring an end to the deadly pandemic.

This week in Episode 2, Lisa Ling speaks with three leading scientists who have been on the frontlines of Zika, malaria and HIV to give you the inside scoop on the latest in the development of a coronavirus vaccine, and the process of going from lab to clinic.”

Read the Press Release: How We’re Mobilizing Our Resources to Help Find Solutions for Covid-19