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U.S. state, local government lawsuits over opioids face uphill battle

[June 02, 2017] By Nate Raymond

BOSTON (Reuters) - A growing number of U.S. states, counties and cities are filing lawsuits accusing drug companies of deceptively marketing opioid painkillers to downplay their addictiveness, but some lawyers say the industry's highly regulated nature could pose a hurdle to their success.

Ohio on Wednesday became the latest, and largest, state or local government to bring an opioid lawsuit, suing Purdue Pharma LP, Johnson & Johnson's Janssen Pharmaceuticals Inc unit, Endo International Plc, Teva Pharmaceutical Industries Ltd's and Allergan Plc.

The lawsuit seeks to recover money the state and its residents spent on unnecessary opioid prescriptions, as well as costs associated with addiction treatment. The five companies have all denied the allegations.

Mississippi, counties in New York and California and the city of Chicago have filed similar lawsuits against the opioid makers, and plaintiffs lawyers say more are on the way.

Some of those lawyers think the number of lawsuits could eventually snowball, resulting in an outcome similar to the $206 billion settlement tobacco companies reached with 46 states in 1998.

But some defense lawyers note that opioids, unlike cigarettes at the time, are regulated by the U.S. Food and Drug Administration.

In their view, judges and juries could defer to the agency's approval of the companies' opioid products as safe and effective for treating chronic pain and of the drugs' warning labels that disclosed addiction-related risks.

Jodi Avergun, a former chief of staff of the U.S. Drug Enforcement Administration and now a defense lawyer with Cadwalader, Wickersham & Taft, said the FDA's role approving the drugs was a "fundamental weakness" of the lawsuits.

"I think at the end of the day they're fairly difficult cases for the plaintiffs to win," said Avergun.

In 2015, the judge overseeing the lawsuit against the five drugmakers by California's Santa Clara and Orange counties halted the case out of concern it would interfere with FDA studies related to the risks of long-term opioid treatment.

The stay was recently partially lifted to allow for settlement talks, among other things. Teva last week became the first company in the case to settle, paying $1.6 million.

Assistant County Counsel Danny Chou said the deal's size reflected Teva's small opioid market share. Talks with other defendants are ongoing, and the county will file a revised lawsuit if no settlement is reached, he said.

Carl Tobias, a professor at Richmond School of Law, said FDA-approved warning labels and the role of doctors in prescribing medication can insulate pharmaceutical companies from liability for failing to warn of a drug's risks.

But he noted Ohio's lawsuit claimed the companies used advertising in medical journals and marketing presentations to downplay the risks of opioids.

In announcing the lawsuit, Ohio Attorney General DeWine argued the drugmakers' deception continued "despite the warnings in the small print of their very own drug labels and package inserts which clearly contradict their marketing."

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A used needle sits on the ground in a park in Lawrence, Massachusetts, U.S., May 30, 2017, where individuals were arrested earlier in the day during raids to break up heroin and fentanyl drug rings in the region, according to law enforcement officials. REUTERS/Brian Snyder

"You can give a great warning but undercut it, and that can go to the fraud point," Tobias said.

In September, the federal judge overseeing Chicago's opioid lawsuit allowed the case to proceed after finding the city alleged sufficient facts to back its claim that the companies deceived healthcare providers.

Fraudulent marketing was also at issue a decade ago when Purdue paid more than $600 million and pleaded guilty to misbranding the opioid drug OxyContin by falsely touting it as less addictive than rival products.

Along with their arguments based on FDA approval, the drug companies are also taking aim at state and local governments' use of private plaintiffs' lawyers to bring opioid lawsuits in exchange for a percentage of any settlement or judgment.

Five law firms are representing Ohio on a contingency-fee basis.

Drugmakers have argued their constitutional due process rights are violated when profit-seeking private lawyers, as opposed to public servants, pursue government cases seeking large damages.

The companies scored a victory in 2016 when a judge invalidated one such agreement between former New Hampshire Attorney General Joseph Foster and the law firm Cohen Milstein Sellers & Toll.

Now on appeal to the New Hampshire Supreme Court, the ruling effectively blocked the state from filing a lawsuit. A similar bid is underway to invalidate a contingency fee deal between the law firm Simmons Hanly Conroy and New York's Suffolk County.

Paul Hanly, of Simmons Hanly Conroy, said the drug companies were making a "completely frivolous argument" that would not deter opioid litigation.

He is representing three other New York counties in opioid lawsuits and preparing to bring lawsuits on behalf of several more.

"What we're seeing is a feeding frenzy as plaintiffs' lawyers are looking around and seeing this high-profile litigation and are clamoring to get in," Hanly said.

(Reporting by Nate Raymond in Boston; Editing by Anthony Lin and Lisa Shumaker)

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