J&J, Teva Beat $50 Billion Opioid Case in First Industrial Victory

(Bloomberg) — Johnson & Johnson, Teva Pharmaceutical Industries Ltd. and other former opioid makers took the pharmaceutical industry’s first win in the sprawling four-year lawsuit over the drugs, defeating a lawsuit by local authorities in California alleging they were addressing a public health crisis through deceptive marketing. Supreme Court Justice Peter Wilson in Santa Ana on Monday rejected claims that units of J&J, Teva, Endo International Plc and Abbvie Inc.’s Allergan Plc cheated doctors and patients about the addictiveness of opioid painkillers and created a so-called “nuisance” linked to the medicines. Officials in Los Angeles, Santa Clara and Orange counties and the city of Oakland demanded as much as $50 billion to boost police and treatment budgets depleted by the epidemic. It is the first time a judge or jury has dismissed claims by states or local governments that ex-opioid makers should be held liable for the effects of the US opioid epidemic, which has claimed the lives of nearly 500,000 Americans over the past two decades. Teva shares rose as much as 11% in Tel Aviv on Tuesday.

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“The court finds that the plaintiffs have failed to demonstrate public nuisance for which the defendants are legally responsible,” Wilson concluded in a preliminary ruling.

Lawyers for local governments said they will ask a California appeals court to review the ruling.

“California residents will have an opportunity to appeal and ensure that no opioid manufacturer can engage in reckless business practices that endanger public health in the state for their own benefit,” they said in a statement.

J&J said it was pleased that Wilson found the opioid marketing and promotion of his Janssen unit “appropriate, responsible and did not cause public nuisance,” a statement said. John Hueston, an attorney for Endo, said the judge correctly found that the company “made no false or misleading statements, and that Endo’s lawful conduct did not cause the widespread public nuisance at issue in the plaintiffs’ complaint.”

Teva also praised the ruling, saying the company recognizes that communities in the US are still suffering the effects of the opioid epidemic and need help.

“A clear victory for the many patients in the US suffering from opioid addiction will only come when comprehensive arrangements are finalized and resources are made available to all who need them,” the Israel-based drugmaker said in a statement.

Read more: J&J, Distributors Unveil $26 Billion Opioid Deal With States

The ruling marks a turning point for J&J, who faced a 2019 Oklahoma judge’s ruling that caused public nuisance in the state through its opioid marketing. The judge ordered the New Jersey-based drug maker to reimburse $465 million for tax dollars spent addressing the social problems associated with the epidemic. The ruling is still on appeal.

While some players in the pharmaceutical industry, such as J&J, moved to set up global arrangements for their opioid obligations, the case brought before the California governments was taken to court.

J&J and the three largest opioid distributors in the US have offered a $26 billion deal to reverse more than 4,000 state and municipal lawsuits. That agreement has yet to be finalized. Teva said it offered $23 billion worth of opioid treatment drugs, a valuation disputed by many states, cities and counties.

Local government attorneys tried to convince Wilson that over the past two decades opioid makers have falsely flooded the state with 20 billion opioid doses and defrauded doctors and consumers about the addictive nature of the pills. This led to greater dependence and overdoses and caused nuisance.

However, the judge said the governments’ evidence of a dramatic increase in opioid prescriptions was not enough to pass the California test that a problem labeled a nuisance is “substantial and unreasonable.” The municipalities have provided no evidence of “medically inappropriate” opioid prescriptions linked to the company’s allegedly deceptive marketing, Wilson said. He said the increase could be linked to appropriate prescriptions for patients in pain.

“The court cannot conclude that an increase in medically justified prescriptions can be a basis for liability for nuisance, even if there are undesirable consequences,” the judge wrote in the 42-page ruling.

The case is Santa Clara v. Purdue Pharma LP, 30-2014-00725287, Superior Court for Orange County, California (Santa Ana).

(Teva stock updates in third paragraph)

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