America's opioid crisis triggers first corporate fine

An Oklahoma judge has ordered Johnson & Johnson to pay $572m – much less than expected – in the first trial involving a state seeking compensation for the public-health crisis spawned by opioid painkillers.

Container of Johnson's baby powder © Justin Sullivan/Getty Images

Shares in Johnson & Johnson (J&J) jumped by more than 5% this week. No wonder, says Jan Hoffman on Bloomberg. An Oklahoma judge ordered the company to pay "far less" than expected in the first trial involving a state seeking compensation for the public-health crisis spawned by opioid painkillers.

The judge said J&J had created a "temporary" public nuisance by "duping" doctors into overprescribing its opioid-based medications. But the $572m payment was much lower than the $17.5bn Oklahoma had been seeking. The case has been closely monitored by around two-dozen opioid makers, distributors and retailers facing more than 2,000 similar lawsuits around the US.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

The verdict may have given investors "some hope" that opioid litigation "won't be as destructive as some on Wall Street have feared", says Charley Grant in The Wall Street Journal. However, they should "hold the celebration" since the "cloud hanging over drug stocks won't clear up soon". Future lawsuits will be heard in different courts. The unpredictable nature of litigation means these companies "could owe nothing; a sum that bankrupts them and sends their share prices to zero; or any outcome in between".

The judgment was "important for reasons that go beyond the dollar figure attached to it", says Jay Willis for It was based on "public nuisance...theory", the same principle behind the "massive lawsuits filed against the tobacco industry in the mid-1990s". That led to a $250bn payment "the largest civil settlement in US history".



Stock markets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Stock markets

There are lots of reasons to be bearish – but you should stick with the bulls

There are plenty of reasons to be gloomy about the stockmarkets. But the trend remains up, says Dominic Frisby. And you don’t want to bet against the …
17 Jul 2019

Good news on jobs scares US stockmarkets

June brought the best monthly US jobs growth of the year, but stockmarkets were not best pleased.
11 Jul 2019

Trade-war ceasefire boosts stockmarkets

Stockmarkets sighed with relief after the G20 summit in Japan brought a handshake between Donald Trump and Xi Jinping.
4 Jul 2019

Most Popular

House prices

The biggest risk facing the UK housing market right now

For house prices to stagnate or even fall would be healthy for the property market, says John Stepek. But there is a distinct danger that isn't going …
17 Feb 2020

The euro’s slide against the US dollar looks set to continue

The euro has been in a bear market against the US dollar for two years now. And on a broader scale since 2008. A decline like that is telling us somet…
19 Feb 2020
Share tips

Three overlooked stocks to buy now

Each week, a professional investor tells us where he’d put his money. This week: Joe Bauernfreund, portfolio manager at the AVI Global Trust, highligh…
17 Feb 2020

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020