Why Johnson & Johnson Is a Litigation Magnet
(Bloomberg Businessweek) -- I asked a corporate lawyer not long ago which company tends to be involved in the most litigation. He didn’t hesitate: Johnson & Johnson. A quick look at last year’s annual report would seem to confirm this: Its “legal proceedings” section runs close to 10,000 words. The number of suits climbs into the mid-five digits.
For most companies, lawsuits are just another cost of doing business. What makes J&J unique is that its businesses—consumer health products, pharmaceuticals, and medical devices—tend to be litigation magnets. The company trades suits with everyone from rival companies to powerful government agencies to classes of consumers.
● Product Liability
According to its 2017 annual report, Johnson & Johnson is facing 53,000 suits against its pelvic mesh, 13,700 against its schizophrenia drug Risperdal, and 6,600 against its most famous product, talcum powder. The latter have gotten the most attention, and justly so: In July, for instance, 22 women who claimed J&J’s product caused their ovarian cancer were awarded an eye-popping $4.6 billion. The company has appealed those judgments; it’s also won several recent cases, arguing there’s no science to back the alleged cancer link.
● Intellectual Property
Patent lawsuits are baked into the model of the pharmaceutical business, so it’s no surprise that the J&J legal department is constantly either suing to keep a generic product off the market or defending against a generic company trying to invalidate one of its patents. For instance, J&J has at least six ongoing lawsuits to protect its patent for Zytiga, a cancer drug. It settled litigation over Complera, an HIV drug, in November of last year. And it’s fighting a lawsuit brought by the University of Texas system alleging that sutures made by Ethicon, a J&J company, infringe two of its patents.
● Government Inquiries
J&J lists all sorts of these in its annual report: “alleged price fixing,” “nondisclosure of alleged health risks,” whistleblower complaints, and so on. But one category stands out: the lawsuits being brought by cities, counties, and about two dozen states against J&J and other opioid manufacturers seeking compensation for the damage the drugs have done in their communities. State attorneys general are describing these cases as similar to the ones brought 20 years ago against Big Tobacco. They’re hoping for a similar multibillion-dollar result.
● How Much Does All This Cost?
A lot. J&J spent $1.3 billion on legal expenses last year, which is, on average, what it’s been spending since at least 2012. I tried to get a company spokesman to tell me how many lawyers it had on staff, but he wouldn’t bite. “Our in-house legal teams do much more than litigate,” he said. —Nocera is a business columnist for Bloomberg Opinion.
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