Picture: REUTERS / BRENDAN MCDERMID
Picture: REUTERS / BRENDAN MCDERMID

Delaware/New York — Johnson & Johnson’s Janssen unit was hit with an $8bn punitive-damages verdict — the largest jury award in the US in 2019 — over its alleged mishandling of an antipsychotic drug blamed for causing adolescent boys to grow female-sized breasts.

A state court jury in Philadelphia concluded on Tuesday that Janssen’s wrongful marketing of its Risperdal drug to teens warrants the punishment award in the first Pennsylvania case in which such damages could be awarded under an appellate ruling.

The award came in the case of Nicholas Murray, a Maryland resident who began taking Risperdal as a child to help battle autism. A separate jury awarded Murray $1.75m in actual damages in 2015 on his claims the drug caused him to develop female breasts. That award later was cut to $680,000 under Maryland law.

The verdict, which is unlikely to be upheld on appeal, may nonetheless sound an ominous warning for Johnson & Johnson since the company still faces more than 13,000 suits over its Risperdal marketing and failure to warn teens about its health risks, according to the company’s filings with the US Securities and Exchange Commission. More than 7,000 of those cases are pending in state court in Philadelphia, according to court records.

Given the number of trials Johnson & Johnson and Janssen still face in Philadelphia, the $8bn verdict may prompt consideration of setting up a global settlement of the Risperdal litigation, said Carl Tobias, a University of Richmond law professor who teaches about mass torts. The company has already settled some cases, he noted.

“That type of punitive-damage award will encourage more plaintiffs and their counsel to pursue more cases vigorously,” he said. “It may make sense to get out now.”

Johnson & Johnson officials vowed to appeal the ruling and said the punitive award was excessive compared to the actual-damage figure. The drugmaker also faulted a judge’s refusal to allow it to present mitigating evidence about Janssen’s handling of the drug.

Shares under pressure

“This decision is inconsistent with multiple determinations outside of Philadelphia regarding the adequacy of Risperdal’s labelling, the medicine’s efficacy, and findings in support of the company,” Ernie Knewitz, a Johnson & Johnson spokesperson, said.

Johnson & Johnson shares fell $3.11, or 2.4%, to $128.73 in premarket trading on Wednesday.

The company’s shares have been under pressure in recent months because of litigation woes spawned by suits alleging its iconic Baby Powder is causing various types of cancers. It is also facing numerous legal claims over its alleged role in the US opioid addiction and overdose crisis.

“This jury resoundingly told J&J [Johnson & Johnson] that its actions were deliberate and malicious,” Tom Kline and Jason Itkin, two of Murray’s lawyers, said.

“The conduct the jury saw in the courtroom was clear and convincing that J&J disregarded the safety of children.”

Stephen Sheller, another of Murray’s lawyers, added that the verdict shows that Johnson & Johnson “can’t get away with this kind of conduct anymore”.

Plaintiffs contend Johnson & Johnson and Janssen illegally marketed Risperdal to youngsters prior to 2007, when US Food and Drug Administration officials approved its use for teens diagnosed with autism. The companies also face allegations they hid the risk the drug could cause breast development to protect billions of dollars in profits.

In 2013, Johnson & Johnson agreed to pay $2.2bn to resolve criminal and civil probes into allegations that it illegally marketed the drug to children and the elderly. The settlement, which also includes marketing claims about two other Johnson & Johnson drugs, was one of the largest US health-fraud penalties in history.

A Pennsylvania superior court ruling in 2018 cleared the way for punitive damages to be considered in Risperdal cases tried in the state. Some juries had been improperly barred from weighing such damages in the past, the court concluded.

The $8bn verdict is four times the size of the next-largest US award so far in 2019. In May, a California jury awarded a couple $2.055bn in compensatory and punitive damages over claims they got cancer from exposure to Bayer’s Roundup weedkiller. That award was later cut to $86.7m.

Johnson & Johnson had more than $15bn in net earnings in 2018.

Bloomberg