Oklahoma’s Cleveland County District Judge Thad Balkman ordered Johnson & Johnson to pay $572 million to the state for liability in the opioid crisis that has claimed 400,000 lives. The number is much lower than the $17.5 billion sought by Oklahoma Attorney General Mike Hunter.
Johnson & Johnson has been accused of foul marketing practices that elevated the effectiveness while minimizing the risks of their drugs that contained opioids. This is a landmark case that may be referenced in an upcoming federal case in October that includes nearly 2000 plaintiffs. Lawyers for J&J say they’ll appeal the ruling.
I’m not going to dive into the merits of the case itself as I didn’t hear the 7-weeks of testimony. I’ll stipulate that the ruling is legitimate. What’s important here is the number. Even for a company the size of J&J, it’s a large sum of money. But what’s more important is how it could affect them nationwide if it’s used as the benchmark.
Of the 400,000 opioid-related deaths, only 6,000 happened in Oklahoma. If the scope is an indicator of how this will play out in the federal case, then we can extrapolate the total cost to be around $38 billion.
Over 30 years, it’s an acceptable number if they’re forced to pay. This is why stocks rose 5% following the ruling. Overall, this is great news for the company. But there’s a catch.
Preferably, J&J would rather have the ruling overturned and that would have been much easier if the judge had slapped them with a number much closer to what the District Attorney sought. Since the ruling is reasonable, chances are lower that they’ll be able to win in appeal.
Some have compared this to the $246 billion settlement the tobacco industry agreed to in 1998. This isn’t likely to get anywhere that number unless the judge in the federal case turns activist to try to harm the company. Otherwise, it’s a win-win for all.
We are currently forming the American Conservative Movement. If you are interested in learning more, we will be sending out information in a few weeks.
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