Opioid Racketeering Claims Against Drug Companies Allowed to Proceed 

(Bloomberg) -- A lawsuit seeking to hold drugmakers and distributors responsible for a nationwide opioid epidemic should be allowed to move forward, a federal magistrate said in a preliminary ruling that may increase the likelihood of a settlement.

Companies including Johnson & Johnson and McKesson Corp. are defending lawsuits seeking to hold them responsible for opioid addictions that claim the lives of more than 100 Americans daily. More than 1,000 counties and cities are seeking billions of dollars in damages.

In a 103-page ruling on Friday, U.S. Magistrate Judge David Ruiz in Cleveland recommended to the judge overseeing the case, Dan Polster, that most of the claims in a so-called test case be allowed to move forward. Polster’s eventual ruling -- as part of a lawsuit on behalf of Summit County, Ohio, and the city of Akron -- may influence decisions in many of the other lawsuits as well.

"Plaintiffs, local governments, have been impacted by the opioid epidemic,” Ruiz wrote. “This court cannot say at this early stage of the proceedings that the plaintiffs’ injuries are so remote as to bar any potential recovery."

Hard-hit states including Ohio, West Virginia and Kentucky have accused drugmakers such as J&J and Purdue Pharma Inc., and distributors like McKesson and AmerisourceBergen Corp., of understating the risks of prescription opioids, overstating their benefits, and failing to halt suspiciously large shipments to pharmacies.

With the cases consolidated for pretrial proceedings in Polster’s court in Cleveland, the parties have been quietly engaged in settlement talks. But drugmakers and distributors have pushed back on the plaintiffs’ demands, hoping to narrow or defeat the lawsuits in the early stages in order to cut or eliminate their settlement costs.

The companies can challenge Ruiz’s ruling before Polster, but Friday’s decision may add to the pressure on them to settle. The first trial in the litigation is scheduled for September on behalf of four Ohio municipalities.

"We will continue to defend ourselves in this litigation,” J&J said in a statement. “Our actions in the marketing and promotion of these medicines were appropriate and responsible. The labels for our prescription opioid pain medicines provide information about their risks and benefits, and the allegations made against our company are baseless and unsubstantiated.”

Representatives of McKesson and Teva Pharmaceuticals declined to comment on the decision. A Purdue Pharma spokesman didn’t have an immediate comment. Other drugmakers, wholesalers and pharmacies either declined to comment or didn’t respond to requests for comment.

Ruiz recommended that claims including racketeering, fraud, conspiracy and negligence be allowed to move forward. But in a portion of his opinion that may have limited applicability, he urged Polster to dismiss some of the claims that the marketing and distribution of opioids caused a public nuisance.

“This is a major step forward for the over 1,000 communities working to hold the pharmaceutical industry accountable for the countless lives that have been lost to opioid addiction,” lawyers for the plaintiffs said in a statement.

Pharma companies have advanced numerous defenses. They say they’re free from liability because some patients misused their products and because states haven’t found doctors who blame opioid marketing for influencing their prescribing habits. They reject comparisons to the 1990s litigation against cigarette makers, which led to a $246 billion settlement, because opioids are a government-regulated product dispensed only with a doctor’s prescription.

The case is In Re National Prescription Opioid Litigation, 17-md-2804, U.S. District Court, Northern District of Ohio (Cleveland).

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