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Johnson & Johnson hit as jury awards ‘excessive’ $8 billion in damages

Written by: | no-reply@reuters.com | Dated: Wednesday, October 9th, 2019

 

(Reuters) – Shares of Johnson & Johnson dipped 2% on Wednesday after a jury awarded $8 billion in punitive damages to a man who accused the drugmaker of failing to warn that young men using its antipsychotic drug Risperdal could grow breasts.

Analysts called the amount excessive, particularly since the plaintiff, Nicholas Murray, had already won $680,000 in compensatory damages over his claims.

But several said that J&J’s shares were now exposed to fears among investors that it would be hammered by further litigation costs as it battles other claims over Risperdal, its opioid treatments and talcum powder.

“It’s definitely a disproportionate award,” Bernstein analyst Lee Hambright said, noting that the FDA-approved label for the drug does mention breast growth as a side effect.

“(But) I think the stock reaction shows how sensitive investors are about litigation-related concerns for Johnson & Johnson.”

Wells Fargo analyst Lawrence Biegelsen said the $8 billion figure will “almost certainly be reduced”.

“The Supreme Court has said it should be a single digit ratio between compensatory and punitive damages,” he said.

“The important number here is the compensatory damages.”

J&J said the award was “grossly disproportionate with the initial compensatory award” and said it was confident it would be overturned.

The Philadelphia Court of Common Pleas verdict was the first in which a Pennsylvania jury had been able to consider awarding punitive damages in one of thousands of Risperdal cases pending in the state.

In 2013, Johnson & Johnson paid more than $2.2 billion to resolve civil and criminal investigations by the U.S. Department of Justice into its marketing of Risperdal and other drugs.

According to a recent filing, the company faces some 13,400 lawsuits tied to Risperdal, which allege the drug caused a condition called gynecomastia in boys, in which breast tissue becomes enlarged.

Risperdal was approved by the U.S. Food and Drug Administration in 2002 to treat schizophrenia, but was not cleared for use in children until 2006.

While the drug’s label does note that gynecomastia was reported in 2.3% of Risperdal-treated patients in clinical trials involving 1885 children and adolescents, the lawsuits generally claim the company understated the risk. 

Johnson & Johnson is also among drugmakers named in lawsuits seeking to hold the pharmaceutical industry responsible for the nation’s opioid crisis and in August was asked to pay $572.1 million to the state of Oklahoma for its role in fueling the epidemic.

 

Reporting by Tamara Mathias in Bengaluru; editing by Patrick Graham

 

Reuters source:

https://www.reuters.com/article/us-johnson-johnson-risperdal/johnson-johnson-hit-as-jury-awards-excessive-8-billion-in-damages-idUSKBN1WO1MW

 

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