Liability Trial of Opioid Drug Maker Could Set Precedents

By Jackie Fortier, Kaiser Health News

All eyes will be on Oklahoma this week when the first case in a flood of litigation against opioid drug manufacturers begins. Oklahoma Attorney General Mike Hunter’s suit alleges Johnson & Johnson, the nation’s largest drugmaker, helped ignite a public health crisis that has killed thousands of state residents.

With just two days to go before the trial, one of the remaining defendants, Teva Pharmaceutical, announced an $85 million settlement with the state on Sunday. The money will be used for litigation costs and an undisclosed amount will be allocated “to abate the opioid crisis in Oklahoma,” according to a press release from Hunter’s office.

In its own statement, Teva said the settlement does not establish any wrongdoing on the part of the company, adding Teva “has not contributed to the abuse of opioids in Oklahoma in any way.”

That leaves Johnson & Johnson as the sole defendant.

Court filings accuse the company of overstating the benefits of opioids and understating their risks in marketing campaigns that duped doctors into prescribing the drugs for ailments not approved by regulators.

The bench trial — with a judge and no jury — is poised to be the first of its kind to play out in court.

Nora Freeman Engstrom, a professor at Stanford Law school, said lawyers in the other cases and the general public are eager to see what proof Hunter’s office offers the court.

“We’ll all be seeing what evidence is available, what evidence isn’t available and just how convincing that evidence is,” she said.

Most states and more than 1,600 local and tribal governments are suing drugmakers and distributors. They are trying to recoup billions of dollars spent on addressing the fallout tied to opioid addiction.

Initially, Hunter’s lawsuit included Purdue Pharma, the maker of OxyContin. In March, Purdue Pharma settled with the state for $270 million. Soon after, Hunter dropped all but one of the civil claims, including fraud, against the remaining defendants. Teva settled for $85 million in May, leaving Johnson & Johnson as the only opioid manufacturer willing to go to trial with the state.

But he still thinks the case is strong.

“We have looked at literally millions of documents, taken hundreds of depositions, and we are even more convinced that these companies are the proximate cause for the epidemic in our state and in our country,” Hunter said.

The companies involved have a broad concern about what their liability might be, said University of Kentucky law professor Richard Ausness.

“This case will set a precedent,” he said. “If Oklahoma loses, of course they’ll appeal if they lose, but the defendants may have to reconsider their strategy.”

With hundreds of similar cases pending — especially a mammoth case pending in Ohio — Oklahoma’s strategy will be closely watched.

“And of course lurking in the background is the multi-state litigation in Cleveland, where there will ultimately be a settlement in all likelihood, but the size of the settlement and the terms of the settlement may be influenced by Oklahoma,” Ausness said.

Rx Opioids ‘Useful Products’

The legal case is complicated. Unlike tobacco, where states won a landmark settlement, Ausness pointed out that opioids serve a medical purpose.

“There’s nothing wrong with producing opioids. It’s regulated and approved by the Food and Drug Administration, the sale is overseen by the Drug Enforcement Administration, so there’s a great deal of regulation in the production and distribution and sale of opioid products,” Ausness said. “They are useful products, so this is not a situation where the product is defective in some way.”

It’s an argument that has found some traction in court. Recently, a North Dakota judge dismissed all of that state’s claims against Purdue, a big court win for the company. In a written ruling that the state says it will appeal, Judge James Hill questioned the idea of blaming a company that makes a legal product for opioid-related deaths.

“Purdue cannot control how doctors prescribe its products and it certainly cannot control how individual patients use and respond to its products,” the judge wrote, “regardless of any warning or instruction Purdue may give.”

Now the Oklahoma case rests entirely on a claim of public nuisance, which refers to actions that harm members of the public, including injury to public health.

“It’s sexy you know, ‘public nuisance’ makes it sound like the defendants are really bad,” Ausness said.

If the state’s claim prevails, Big Pharma could be forced to spend billions of dollars in Oklahoma helping ease the epidemic. “It doesn’t diminish the amount of damages we believe we’ll be able to justify to the judge,” Hunter said, estimating a final payout could run into the “billions of dollars.”

Hunter’s decision to go it alone and not join with a larger consolidated case could mean a quicker resolution for the state, Ausness said.

“Particularly when we’re talking about [attorneys general], who are politicians, who want to be able to tell the people, ‘Gee this is what I’ve done for you.’ They are not interested in waiting two or three years [for a settlement], they want it now,” he said. “Of course, the risk of that is you may lose.”

Oklahoma has the second-highest uninsured rate in the nation and little money for public health. Of the $270 million Purdue settlement, $200 million is earmarked for an addiction research and treatment center in Tulsa, though no details have been released. An undisclosed amount of the $85 million Teva settlement will also go to abating the crisis.

This story is part of a partnership that includes StateImpact Oklahoma, NPR and Kaiser Health News. KHN is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

Soaring Cost of Multiple Sclerosis Drugs 'Alarming'

By Pat Anson, Editor

The cost of drugs used to treat multiple sclerosis (MS) in the United States has soared as much as 700 percent in the past two decades, according to researchers who call the price escalation “alarming” and possibly coordinated by drug companies.

There are no multiple sclerosis drugs now available in the U.S. with a list price below $50,000 a year, which is two to three times more than the price of the same drugs in Canada, Australia or the United Kingdom. Prices of MS drugs rose at five to seven times the rate of drug inflation in the U.S.

“The coordinated price escalations for these therapies has lead to increasing access and affordability problems for patients with MS. Pricing decisions by pharmaceutical companies need to better reflect the financial realities and constraints of our healthcare system as opposed to a strategy of whatever our dysfunctional market will bear,” said Daniel Hartung, an associate professor in the Oregon State University/Oregon Health & Science University College of Pharmacy, in an email to Pain News Network.

Hartung is the lead author of a scathing new study appearing in the journal Neurology, which blames the soaring cost of MS drugs on the greed of drug companies and the inability of a national healthcare system to negotiate drug prices.

"The simplest explanation is that pharmaceutical companies raise prices of new and old MS disease modifying therapies in the United States to increase profits, and our healthcare system puts no limits on these increases," the researchers wrote in their report. "The U.S. Medicare program, the largest single-payer healthcare system in the U.S., is legally prohibited from negotiating drug prices directly with the pharmaceutical industry.

“Government-issued patent monopolies, third-party payers, lack of reimbursement transparency, and imperfect clinical information all contribute to a seemingly dysfunctional marketplace where expanded choice has led to higher, rather than lower, prices. Some argue that recent trends in industry pricing suggest collusive behavior between manufacturers, although this is challenging to prove with price data alone.”

Pricing Defies "Common Sense"

The researchers cite several examples of older MS drugs rising in price decades after they were approved by the Food and Drug Administration – and long after pharmaceutical companies recovered the cost of developing the medications.

The annual cost of Copaxone, for example, was $8,292 when it was introduced in 1996 by Teva Pharmaceuticals. Today it is $59,158 – over seven times higher.

Avonex, another early MS treatment, had an annual cost of $8,723 when it was introduced by Biogen in 1996. Today it is $62,394 – also seven times higher.

"Economics 101 would suggest that competition should lower prices. In the pharmaceutical industry we often don't see that. Many professionals now believe that it's time to push back, to say enough is enough," said Hartung.

“What has happened defies common sense, logic, and the expected rules of the marketplace,” wrote T. Jock Murray, MD, in an editorial about Hartung’s study also published in Neurology. “These counter-intuitive increases suggest the possibility of collusion among the manufacturers, but the authors say they do not have evidence.

“What justification does the pharmaceutical industry in the United States offer for the remarkable increase in the costs of these drugs? Well, they do not have to explain, as they are allowed to set prices in a black box, based on the business ethic of maximizing profit, supported by a bizarre law that prevents Medicare from negotiating prices directly with the pharmaceutical industry.”

“We cannot comment on the practices or products of other companies,” said Kate Niazi-Sai, a spokesperson for Biogen in an email to Pain News Network.

“What we can say is that since its introduction as one of the first MS therapies two decades ago, Avonex has helped many thousands of people with MS, who before then had no treatment options.  Since then revenue from Avonex has enabled the development of improved treatments so that today, patients have a breadth of options they need to deal with MS.”

Niazi-Sai said Biogen offers discount programs and free medicines to needy patients worth hundreds of millions of dollars each year. But that’s a fraction of what the company makes from MS drugs.

According to first quarter financial results released by Biogen, sales of Avonex and other MS therapies were $2.1 billion, compared to $1.7 billion in the same quarter last year.

Niazi-Sai said the money is put to good use.

“Revenue from our therapies for MS and hemophilia are now fueling the search for a way to reverse or possibly cure MS, as well as new treatments for Alzheimer’s disease, Lou Gehrig’s disease and other devastating medical conditions.  We are eager to be part of any thoughtful discussion about funding medical advances. Anyone who believes there is a better way should propose it," she wrote.

Teva Pharmaceuticals declined to comment on its pricing policies, but said in a statement to Pain News Network that “the wholesale acquisition cost for Copaxone is competitive to other branded molecules in this category. It is reflective of investments made to research, develop and commercialize a safe and effective relapsing MS product.”

MS is a chronic and incurable disease which attacks the body’s central nervous system, causing numbness in the limbs, difficulty walking, paralysis, loss of vision, fatigue and pain.

Escalating costs for MS therapies and other specialty drugs are a growing concern in the healthcare industry. A recent study said the cost of treating rheumatoid arthritis with new biologic drugs has become a “significant financial burden” for many patients. Patients enrolled in Medicare Part D plans paid an average out-of-pocket cost of $835 a month for a biologic drug in 2013. Costs varied widely depending on the drug – from $269 to $2,993 a month.

"Pricing in the pharmaceutical industry increasingly is a case of whatever the market will bear," Hartung said. "We used to think that any drug with $1 billion in sales was a blockbuster, but last year a drug for hepatitis C had 10 times that, or $10 billion in sales. This does not necessarily mean that drug research and innovation will be 10 times better.”