First Opioid Jury Trial Marks High-Stakes Test for Drug Industry
(Bloomberg) -- Jurors on New York’s Long Island are set to determine whether a group of opioid makers and drug distributors created a public health crisis and should pay for it, in a bellwether trial for lawsuits filed by communities across the U.S.
Endo International Plc, Teva Pharmaceutical Industries Ltd. and McKesson Corp. are among the companies that New York Attorney General Letitia James and Nassau and Suffolk counties say made billions of dollars selling the highly addictive pills while illegally marketing them or turning a blind eye to suspiciously large orders. Opening arguments in the Central Islip, New York, trial are scheduled to start Tuesday.
The stakes are high for the industry. One defendant, Johnson & Johnson, agreed on Saturday to pay $263 million to settle its share of the case. Analysts predict companies eventually will have to spend tens of billions of dollars combined to resolve thousands of lawsuits over their role in the U.S. opioid epidemic. But so far, only one trial has been concluded, when a judge in Oklahoma ruled against a single company, J&J. And legal experts say a jury may be more sympathetic to damage claims.
The New York trial will be “the first time you’ll have a group of regular people, who have likely been effected by the opioid crisis, deciding whether to hold these companies accountable,” said Elizabeth Burch, a University of Georgia law professor who’s been following the litigation. “It will certainly be a different vibe from the judge-only cases.”
Suffolk and Nassau counties are seeking reimbursement for what the local governments spent dealing with the fallout from overdoses and addictions. The trial in Central Islip will be used as a test for billions of dollars in claims made by other municipalities in New York, as well as an indicator of what may lie ahead for the drug makers, distributors and pharmacies in other states.
“The eyes of the world are on New York as we prepare to lay bare the callous and deadly pattern of misconduct these companies perpetrated as they dealt dangerous and addictive opioids across our state,” James said Friday in an emailed statement.
Suffolk County had New York’s fifth-highest rate of opioid-related overdose deaths in 2017, the Fiscal Policy Institute said in a 2019 report. Neighboring Nassau, also a plaintiff, ranked 18th. Economic losses from the epidemic topped $16 billion for the communities over two years starting in 2016, researchers found.
The companies argue the epidemic wasn’t caused by prescription painkillers but by illegal drugs -- including synthetic opioids such as fentanyl -- brought into the U.S. by drug cartels and criminal gangs. In court filings, they said they produced, transported and sold opioids only to fill doctors’ prescriptions and had no control over abuse of their products.
“Our actions relating to the marketing and promotion of these important prescription pain medications were appropriate and responsible,” J&J spokesman Jake Sargent said. J&J’s Jansen unit “worked with regulators to provide appropriate information about their risks and benefits -- everything you’d expect a responsible company to do.”
Drug distributor AmerisourceBergen, in a statement Friday, said it is “looking forward to sharing with the Court the facts about our role in the supply chain and our long-standing commitment to fulfilling our regulatory responsibilities and doing our part to combat the opioid crisis.”
A six-person jury will hear the evidence at a trial expected to last four months. They’ll determine liability, and then, if necessary, another jury will decide any damages.
Advocates for opioid victims will be watching the trial closely. Almost 500,000 Americans were killed by the opioid crisis in the past two decades, eating up hundreds of billions in tax dollars.
States, local governments and Indian tribes have filed more than 3,000 suits against the drug industry. Distributors McKesson, AmerisourceBergen and Cardinal Health Inc. propose paying $21 billion to wipe out their opioid liability, along with a $5 billion offer by J&J.
While some local governments say those proposals aren’t financially substantial enough, the J&J deal with New York on Saturday “may be good news” for the global settlement offer by the company and the three distributors, said Holly Froum, a Bloomberg Intelligence litigation analyst.
Drug makers alone could face liabilities of $57 billion, estimates RBC Capital Markets analyst Daniel Busby, who said the New York trial signals a broader pickup in U.S. opioid litigation as Covid-19 vaccinations help courts return to normal operations. In California, three counties and the city of Oakland are seeking $50 billion in damages for themselves.
“These trials could increase the impetus for a global settlement, or at the very least, better inform manufacturer liability estimates as trial decisions are rendered,” Busby said in a June 4 note to investors.
For New York to win its case, the state will need to spotlight how companies across the opioid supply chain made billions while downplaying the risks and ignoring red flags about dubious orders, said Richard Ausness, a University of Kentucky law professor who teaches about mass torts.
“They need to break the case into manageable chunks so jurors don’t get confused, but this is the first time they’ll be able to have everybody in their gun-sights and can lay out the whole sordid tale,” Ausness said.
Some pharmacy providers are also part of the case, and Walgreens Boots Alliance Inc. remains a defendant in the Long Island trial this week. But last week, Walmart Inc., CVS Health Corp. and Rite Aid Corp. persuaded Judge Jerry Garguilo to remove them from the trial. The claims against those companies by the state and counties will be pursued separately.
In a statement Friday, Walgreens said it “never manufactured or marketed opioids, and never sold opioids to the pain clinics, internet pharmacies or the ‘pill mills’ that fueled the opioid crisis. Prior to 2014, we delivered opioids only to our own pharmacies, and the only place we ever sold opioids was at the pharmacy counter, when presented with a valid prescription written by a licensed physician for a legitimate medical need.”
The trial isn’t the first for the industry. A judge is currently trying claims in California against drug makers, and another is hearing a case in West Virginia against distributors. The only other trial so far was in Oklahoma, where a judge ordered J&J in 2019 to pay $465 million to the state to beef up policing and treatment programs. His ruling is on appeal.
The Long Island jurors won’t likely be strangers to the epidemic.
“Over the last seven years, I’ve been to more funerals than I can count,” said Jeffrey Reynolds, head of the Family and Children’s Association, which provides drug-rehabilitation programs in Nassau County. “The public sector has done what it can do, so now it’s time for the companies that made billions off these drugs to step up.”
While prescription opioids and heroin no longer fuel the epidemic, most abusers are now using cheaper synthetic versions, Reynolds said. “The police are finding fentanyl being combined into a lot of different illegally produced drugs, including anti-depressants such as Xanax,” he said.
Among the Nassau County police’s anti-opioid initiatives is “Operation Natalie,” named for a Long Island teenager who died of a heroin overdose in 2008 after getting hooked on opioids prescribed for pain treatment. The program targets drug dealers and includes a public-education component.
“Just throwing money at this problem won’t solve it,” Victor Ciappa, Natalie’s father, said in an interview. “But if this trial can provide more resources for rehabilitation programs, then maybe we can help other families avoid the tragedy of losing a child.”
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