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 The jury in a Philadelphia court awarded the $8 billion to a man who
previously won $680,000 over his claims that it failed to warn that
young men using Risperdal could grow breasts.
J&J called the sum "grossly disproportionate with the initial
compensatory award" and said it was confident it would be
overturned.
Legal experts agreed that the penalty was likely to be slashed.
But the verdict, which helped drive J&J's shares down 2% on
Wednesday, is an example of how public outrage at the pharmaceutical
industry for high drug prices has contributed to harsher verdicts
against drugmakers accused of wrongdoing in recent years, legal
experts said.
Outsized penalties awarded by some juries highlight risks in a
longstanding strategy by drugmakers such as J&J of taking their
chances at trial rather then settle product liability lawsuits
brought by patients.
"Every pharmaceutical company needs to seriously consider if they
want to litigate to verdict in the present environment, but with the
settlement demands so incredibly high it's not always clear what
their alternative is," said Barry Thompson, a partner at Baker
McKenzie law firm who was not involved in the case.
Drugmakers often prefer to litigate rather than settle in hopes of
protecting their brands and discouraging future patient lawsuits,
Thompson said.
Companies also may use a series of early trial verdicts to gauge the
size of any settlement it might eventually offer, as Merck & Co <MRK.N>
did with its withdrawn Vioxx arthritis pain drug when facing
thousands of lawsuits by patients who claimed harm from the drug.
A 2003 U.S. Supreme Court decision suggests that the upper limit of
a fair punitive penalty in the Risperdal case would be about $6
million based on the earlier compensatory award.
J&J could still get a favorable ruling on appeal that would give the
company leverage in dealing with the remaining cases, said Benjamin
McMichael, a professor at the Alabama School of Law who has
researched punitive damage awards.
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"With such a large punitive damages award at issue, appellate courts
may be more willing to come down hard on the plaintiffs," McMichael
said.
J&J faces more than 13,000 lawsuits tied to Risperdal alleging that
it caused a condition called gynecomastia in boys, in which breast
tissue becomes enlarged. The company is also facing lawsuits
involving its baby powder, opioids, medical devices and other
products.
"We’re operating within a very litigious environment, and we must at
times be willing to go to trial when the science, facts and law are
on our side," J&J spokesman Ernie Knewitz said in an email.
"We also have to remain open to resolving cases through settlement
when and where that’s appropriate to do. We have a proven track
record of being able to successfully and appropriately manage this
balance," Knewitz added.
The company has had its share of legal wins, losses and settlements.
An Oklahoma judge in August ordered J&J to pay $572.1 million to
that state for its part in fueling the opioid crisis by deceptively
marketing addictive painkillers, although the sum was substantially
less than investors had expected.
Johnson & Johnson has said it plans to appeal the ruling.
Earlier this month, the company agreed to pay $20.4 million to
settle claims by two Ohio counties, avoiding a federal opioid trial.
In 2013, J&J 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.
(Reporting by Tamara Mathias in Bengaluru, Tom Hals and Carl
O'Donnell in New York and Julie Steenhuysen in Chicago; editing by
Caroline Humer and Bill Berkrot)
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