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New York Files Charges Against Johnson & Johnson Over Opioid Marketing

New York's Department of Financial Services filed civil charges against Johnson & Johnson (NYSE: JNJ) on Thursday, accusing the biopharmaceutical giant of downplaying the risks to patients associated with the use of prescription opioids.

Specifically, the state accuses Johnson & Johnson of mischaracterizing how safe and effective opioids are at controlling pain as part of its strategy to promote sales. According to the agency, the healthcare company's behavior "dramatically increased health insurance costs for New York consumers" by increasing prescription volume.

A gavel rests on a table in a court room.

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The Johnson & Johnson products highlighted in New York state's statement of charges include Duragesic, a fentanyl patch, and Nucynta, a tapentadol drug. The charges also suggest the company's actions boosted demand for its patented "Norman Poppy," a commonly used variant of the plant that at "one point was responsible for up to 80% of the global supply for oxycodone raw materials."

According to the Department of Financial Services, Johnson & Johnson boosted demand for its opioids and raw materials used to produce opioid drugs at other drugmakers via brochures and third-party publications targeting elderly patients. It also advanced the idea of "pseudoaddiction" -- the false premise that patients who show signs of addiction just need to be given more opioid medication.

Overall, the agency claims the company's actions violated Section 403 of the New York Insurance Law, which prohibits fraudulent insurance acts, and Section 408 of the Financial Services Law, which prohibits "intentional fraud or intentional misrepresentation of a material fact with respect to a financial product or service." Hearings on those charges are scheduled to begin on Jan. 25.

The charges filed Thursday stemmed from the agency's broader investigation of the opioid industry; charges had already been filed against other large opioid manufacturers including Teva Pharmaceutical (NYSE: TEVA) and Allergan (NYSE: AGN).

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Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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