Advertisement

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.

Advertisement - Article continues below

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 gq.com. 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".

Advertisement
Advertisement

Recommended

The British equity market is shrinking
Stockmarkets

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
BP has slashed its dividend – and markets love it
Income investing

BP has slashed its dividend – and markets love it

BP has bowed to the inevitable and cut its dividend in half – and its share price promptly rose. John Stepek explains what it means for shareholders …
4 Aug 2020
Listed companies are dying out, and that could have serious consequences
Stockmarkets

Listed companies are dying out, and that could have serious consequences

Private equity is taking over from public stockmarkets as the biggest provider of capital to companies. That’s bad for investors and bad for society a…
3 Aug 2020
The revolutionary potential of 5G
Sponsored

The revolutionary potential of 5G

SPONSORED CONTENT – With the right investment and support, the next generation of connectivity could transform society
3 Aug 2020

Most Popular

BP has slashed its dividend – and markets love it
Income investing

BP has slashed its dividend – and markets love it

BP has bowed to the inevitable and cut its dividend in half – and its share price promptly rose. John Stepek explains what it means for shareholders …
4 Aug 2020
Listed companies are dying out, and that could have serious consequences
Stockmarkets

Listed companies are dying out, and that could have serious consequences

Private equity is taking over from public stockmarkets as the biggest provider of capital to companies. That’s bad for investors and bad for society a…
3 Aug 2020
Gold hits the big $2,000 level – are Aim miners about to play catch up?
Gold

Gold hits the big $2,000 level – are Aim miners about to play catch up?

With the price of gold shooting through $2,000 an ounce, the yellow metal looks unstoppable. Things are so bullish, even Aim-listed junior gold miners…
5 Aug 2020