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.

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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.

Legal Battles Brew Over High Cost of Arthritis Drugs

By Julie Appleby, Kaiser Health News

Early last winter, Pfizer launched its new rheumatoid arthritis treatment, Inflectra, pricing it 15 percent below the $4,000-a-dose wholesale price of Remicade, the drug for which it is a close copy.

Pfizer figured its lower price would attract cost-conscious insurers.

A year later, though, its drug has barely scratched the market and Pfizer has filed an antitrust suit against its rivals, alleging they are thwarting lower-priced competition through “exclusionary contracts” and rebates.

The outcome of the case — filed in September in U.S. District Court against Johnson & Johnson, the maker of Remicade, and Janssen Biotech — could affect the future of biosimilars, a new class of drugs. Some policy experts say these near-copies of biologics are key to slowing spending on complex and expensive specialty medications like those used to treat rheumatoid arthritis.

At the heart of the case are rebates, which are discounts off the wholesale price of drugs.

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Manufacturers offer them to help keep their products on insurers’ lists of covered drugs. The money mainly goes back to insurers and pharmacy benefit managers, who say the rebates help reduce health care spending.

But Pfizer alleges that those rebates are being used to thwart biosimilars’ entry into the marketplace.

“This is the first antitrust case we’ve seen like this around biosimilars,” said Michael Carrier, a Rutgers Law School professor “Pfizer is claiming that one form of anti-competitive behavior involves withholding rebates from insurers.”

Biosimilars are costly to produce, so they are not likely to trigger the same sharp pricing drop triggered by generics. Still, their manufacturers say they could bring consumers some relief to rival biologics’ high price tags.

Pfizer’s Inflectra is one of the first biosimilars to hit the market since Congress passed legislation in 2010 to pave the way.

According to Pfizer, weeks after Inflectra gained Food and Drug Admininstration approval, J&J moved to stake out its biologic turf.

J&J began requiring insurers and PBMs to sign “exclusionary contracts … designed to block both insurers from reimbursing and hospitals and clinics from purchasing Inflectra or other biosimilars of Remicade despite their lower pricing,” alleges the case filed in federal district court in Philadelphia.

If insurers don’t agree to the J&J contracts, the loss of rebates could “for some insurers, run into the tens of millions of dollars annually,” the Pfizer case alleges.

Even with its lower price, Pfizer faced an uphill battle to win market share.

Remicade is the fifth-biggest-selling drug by revenue in the U.S., reaping more than $4.8 billion in 2016 for makers J&J and Janssen, the suit said. Often, patients are reluctant to switch once they are established on an RA drug that is working for them.

Still, Pfizer thought it would pick up newly diagnosed patients and gain ground that way. But its lawsuit says the drug accounted for only about 4 percent of total sales, with Remicade getting the rest, by early September.

“We stand by our contracts,” said J&J and Janssen Biotech in a written statement. The firms also defend rebates as “competition that is doing what competition is meant to do: driving deeper discounts that will lead to overall lower costs.”

Yet the price of Remicade has not fallen, the Pfizer case says.

Since approval of Inflectra, J&J has raised the list price of Remicade by close to 9 percent, the lawsuit alleges. As of September, Remicade’s average sales price –after discounts and rebates — is more than 10 percent higher than Inflectra.

“This case is a big deal, because it has the potential to bring to light some of the anti-competitive contracting practices at work to keep … prices extremely high,” said Jaime King, a professor at University of California-Hastings College of the Law.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.