How significant is J&J's $572M opioid verdict in Oklahoma? It's complicated

Johnson & Johnson’s highly anticipated opioid ruling in Oklahoma sent shockwaves—or ripples—throughout the drug industry, depending on how one views the $572 million verdict.  

From one perspective, it’s a “landmark” ruling because it’s the first time a court has found a pharmaceutical company liable for the addiction and opioid epidemic, opioid policy expert Andrew Kolodny told Axios. J&J has pledged to appeal and called the decision “flawed.” 

On the flip side, the verdict offers little insight into how a much larger set of litigation—the thousands of lawsuits against opioid drugmakers and distributors grouped in Cleveland, Ohio—will play out.

And for J&J individually, the financial hit is minimal, some analysts pointed out; with sales coming in fast enough to total $81.6 billion in 2018, it would take the company about two and a half days to cover the verdict—if it's forced to pay that much, or anything, after appeals.

J&J’s appeal will likely take years and reduce the verdict amount in the end, Morningstar analysts wrote Monday.

It's tempting to draw conclusions about the success of other claims against drugmakers based on Monday's ruling. But because Oklahoma prosecutors sued J&J alleging violations of “nuisance” law, the judge's decision there doesn't necessarily apply. Many other lawsuits allege mismarketing, corruption, and violations of consumer protection laws.

Plus, J&J marketed branded opioids, while many cases in the MDL focus on generics, SVB Leerink analyst Ami Fadia wrote.

The multidistrict litigation “could provide a more comprehensive forum for generic manufacturers to present their arguments,” Fadia wrote. In Oklahoma, Teva opted to settle for $85 million instead of fighting the state’s claims, while branded opioid maker Purdue Pharma agreed to pay $270 million. 

RELATED: J&J found liable in Oklahoma opioid case and ordered to pay $572M; pledges to appeal 

What Monday's verdict will do is prompt other opioid drugmakers to “think more seriously” about settling the MDL cases in Ohio, Wells Fargo analyst David Maris said in a note to investors. A global settlement could be worth more than $50 billion, he said.

And while investors may have celebrated the $572 million verdict, Maris said it's "not encouraging" for defendant companies, considering the verdict only covered one year of opioid abatement costs, for one company, in a state with a population of just 4 million. Prosecutors asked for more than $17 billion in damages.

In his Monday decision, Judge Thad Balkman wrote that after a 33-day trial featuring 42 witnesses, 874 exhibits and more, “the greater weight of evidence" showed that J&J engaged in "false and misleading marketing." 

J&J's "dangerous marketing campaigns have caused exponentially increasing rates of addiction, overdose deaths” and more, the judge concluded. The conduct qualifies for violating nuisance law, he added. 

J&J hit back that the judgment “disregards the company’s compliance with federal and state laws, the unique role its medicines play in the lives of the people who need them, its responsible marketing practices” and more. Its meds Duragesic and Nucynta “have accounted for less than one percent of total opioid prescriptions in Oklahoma as well as the United States.”  

The judgment is a “misapplication” of nuisance law that has been rejected in other states, J&J's general counsel Michael Ullman said in a statement. 

Following the J&J verdict, Teva's stock jumped about 3% after the bell, but the company's shares were trading down about 7% late Tuesday morning. Allergan's shares were up about 1% late Tuesday morning, while Endo's shares were down about 8%. Mallinckrodt's shares were down more than 13%.

RELATED: Endo strikes $10M opioid settlement with just 2 Ohio counties, and Allergan may not be far behind 

As J&J gets its Oklahoma appeal underway, the company and others—plus market watchers—will shift their attention to Ohio, where a high-stakes trial in the multidistrict litigation is set for October. In Cleveland federal court, thousands of lawsuits are grouped up that claim drugmakers oversold opioid benefits for treating chronic pain and downplayed their risks, and that distributors failed to monitor suspicious orders. Together, the conduct helped create a national opioid and addiction crisis, plaintiffs say. 

Already, Allergan and Endo inked small settlements with the two Ohio counties set to air their claims in the first bellwether trial. The state’s attorney general responded that those deals won’t absolve the companies of claims brought by the state.