Massive jury prize against J&J highlights risks to its legal strategy

(Reuters) – A jury award that struck Johnson & Johnson JNJ.N with $ 8 billion in punitive damages for a case involving its antipsychotic drug Risperdal highlights the risks of the drugmaker’s all-or-nothing legal strategy, several legal experts told Reuters on Wednesday.

A Philadelphia court jury awarded the $ 8 billion to a man who had previously won $ 680,000 for his claims he failed to warn young men using Risperdal could grow breasts.

J&J called the sum “grossly disproportionate to the original compensatory allowance” and said it was confident it would be set aside.

Legal experts agreed the sentence was likely to be reduced.

But the verdict, which helped push J&J shares down 2% on Wednesday, is an example of how public outrage against the pharmaceutical industry over the high drug prices contributed to tougher verdicts against drugmakers accused of wrongdoing in recent years, legal experts have said.

Inordinate penalties imposed by some juries highlight the risks in a long-standing strategy of drugmakers such as J&J to try their luck in a lawsuit rather than settle product liability lawsuits brought by patients .

“Every pharmaceutical company needs to seriously consider whether they want to advocate for a verdict in today’s environment, but with the settlement requirements so incredibly high, it’s not always clear what their alternative is,” said Barry Thompson. , a partner at the Baker McKenzie law firm who was not involved in the case.

Drugmakers often prefer to litigate rather than settle in the hopes of protecting their brands and deterring future patient trials, Thompson said.

Companies can also use a series of first instance verdicts to assess the extent of any settlement they may possibly come up with, as Merck & Co MRK.N has done with its arthritis pain drug Vioxx withdrew in the face of thousands of lawsuits by patients who claimed the drug had caused damage.

FILE PHOTO: The Johnson & Johnson logo is displayed on a screen on the floors of the New York Stock Exchange (NYSE) in New York, United States, May 29, 2019. REUTERS / Brendan McDermid / File Photo

A 2003 United States Supreme Court ruling suggests that the upper limit of a fair punitive sanction in the Risperdal case would be around $ 6 million based on the earlier compensatory award.

J&J could still get a favorable appeal decision that gives the company leverage in handling the remaining cases, said Benjamin McMichael, a professor at the Alabama School of Law who has studied punitive damages.

“With punitive damages this large, appellate courts might be more willing to be tough on plaintiffs,” McMichael said.

J&J faces more than 13,000 lawsuits related to Risperdal, alleging that he caused a condition called gynecomastia in boys, in which breast tissue enlarges. The company also faces lawsuits over its baby powder, opioids, medical devices and other products.

“We operate in a very contentious environment, and sometimes we have to be willing to be judged when science, facts and the law are on our side,” J&J spokesperson Ernie Knewitz said in an email. .

“We must also remain open to resolving cases through settlement when and where it is appropriate. We have a proven track record in our ability to successfully and appropriately manage this balance, ”Knewitz added.

The company has had its share of wins, losses and legal settlements.

In August, an Oklahoma judge ordered J&J to pay that state $ 572.1 million for its share in fueling the opioid crisis by deceptively marketing addictive pain relievers, though the sum was significantly lower than what investors had expected.

Johnson & Johnson have announced their intention to appeal the decision.

Earlier this month, the company agreed to pay $ 20.4 million to settle claims in two Ohio counties, avoiding a federal opioid trial.

In 2013, J&J paid more than $ 2.2 billion to resolve the US Department of Justice’s civil and criminal investigations into its marketing of Risperdal and other drugs.

Reporting by Tamara Mathias in Bengaluru, Tom Hals and Carl O’Donnell in New York and Julie Steenhuysen in Chicago; edited by Caroline Humer and Bill Berkrot

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