Narcotic addiction has plagued human societies for hundreds of years.
So as I have written before, after seeing too many dire results of narcotic addiction during my training and early career, I was dismayed how narcotics were pushed as the treatment of choice for chronic pain in the 1990s, with the predictable result that the US was once again engulfed in an epidemic of narcotic abuse. In the last few years, the narcotics (now called "opioids") epidemic has frequently been in the headlines. A few days ago, a judge decided that one large pharmaceutical/ biotechnology/ device company bears some blame for the problem
The Johnson and Johnson "Landmark" Settlement
On August 26, 2019, the New York Times reported a "landmark," per the headline, settlement:
A judge in Oklahoma on Monday ruled that Johnson & Johnson had intentionally played down the dangers and oversold the benefits of opioids, and ordered it to pay the state $572 million in the first trial of a drug manufacturer for the destruction wrought by prescription painkillers.
The judge wrote
that Johnson & Johnson had promulgated 'false, misleading, and dangerous marketing campaigns' that had 'caused exponentially increasing rates of addiction, overdose deaths' and babies born exposed to opioids.
It seems like a big story, big enough for another NYT article to fret over how the settlement might damage Johnson and Johnson's sterling reputation.
For Johnson & Johnson, which has said it plans to appeal, the decision represents another blow to its reputation as the trusted brand of parents, doctors and nurses.
Wall Street Journal editorialists fretted even more,
the ruling could have far larger, and more dangerous, consequences by opening a vast new arena for product-liability suits.
And warned the opioid epidemic will not
be eased by bankrupting America's pharmaceutical companies
Maybe threats to this upstanding company inspired US President Trump, while running the most conflicted and corrupt administration ever (look here), to promote another fine Johnson and Johnson product. On August 23, 2019, the Atlantic reported,
President Donald Trump said on Wednesday that the government will purchase 'a lot of the drug esketamine, a derivative of ketamine.
Though ketamine is known as a recreational hallucinogen, Trump asserted that a new nasal-spray derivative would be of great benefit to veterans with depression. As he left the White House for a veterans’ conference in Kentucky, he told reporters that he had instructed the Department of Veterans Affairs to make a large purchase—overriding a recent decision by the doctors who manage the hospitals’ formulary of which drugs are to be prescribed.
'There’s a product that’s made right now that just came out by Johnson & Johnson which has a tremendously positive—pretty short-term, but nevertheless positive—effect,' Trump said. But that statement is contrary to the evidence. A review by the Food and Drug Administration of what limited studies have been done with esketamine found mixed results, leaving many scientists unsure if the drug is indeed effective and safe. Just last week, the agency published a report that said the drug was not reliably better than placebo.
Should the Wall Street Journal (and perhaps President Trump) really be so worried? Was this settlement really so dire?
The March of Legal Settlements Continues
In fact, this particular settlement did not seem very harsh. Per the first NYT article,
The amount fell far short of the $17 billion judgment that Oklahoma had sought to pay for addiction treatment, drug courts and other services it said it would need over the next 20 years to repair the damage done by the opioid epidemic.
The amount of the settlement would be unlikely in and of itself to give corporate leadership pause, given that the company's revenues exceeded $81 billion last year (look here).
While the judge found that Johnson and Johnson caused a "public nuisance," this seems unlikely to inspire much shame in corporate leaders, who took no overt responsibility for the narcotic epidemic:
In a statement about the Oklahoma case, Michael Ullmann, the general counsel and executive vice president of Johnson & Johnson, referring to the company’s pharmaceutical subsidiary, said that 'Janssen did not cause the opioid crisis in Oklahoma, and neither the facts nor the law support this outcome.'
'We recognize the opioid crisis is a tremendously complex public health issue,' he said, 'and we have deep sympathy for everyone affected.'
And like many other legal settlements which we have discussed in the past, this one caused no one at Johnson and Johnson who approved, directed, or implemented the deceptive marketing and other bad behavior to suffer any negative consequences.
Ignoring Another Corporation's Dismal Record
Furthermore, the settlement, like most others we have discussed, ignored Johnson and Johnson's extensive track record of misbehavior.
The second NYT article did allow that the company has withstood
a series of damaging setbacks to its brand, including a spate of lawsuits over whether its talcum powder led to ovarian cancer, and high-profile cases over other potentially flawed products, like pelvic mesh and the anti-stroke drug Xarelto, which has caused excessive bleeding.
'Johnson & Johnson is a corporation under duress on a number of fronts,' said Stephen Hahn-Griffiths, an executive at Reputation Institute, which tracks public perception of companies through regular surveys.
However, that barely scratched the surface of Johnson and Johnson's record. In a 2018 post we discussed accusations that Johnson and Johnson tried to cover up the adverse effects of its baby powder. However, we also discussed a settlement the company made of allegations it gave kickbacks to patients to facilitate its over-pricing of Tracleer, a drug for pulmonary artery hyptertension. These were just the latest in a long string of misadventures by the company, as we have been documenting over years. (Our collected posts on Johnson & Johnson are here. An updated version of their legal record from 2010 to 2016 is at the end of this post.)
Perusing the list suggests that this giant company is a poster child for bad behavior by health care organizations. It has faced a multitude of allegations leading to settlements, and sometimes findings of guilt. The charges included many instances of deceptive and unethical marketing, some that promoted drugs or devices for use in situations in which they may have had harms outweighing their benefit, some that involved concealing knowledge of their risks, and some of selling adulterated drugs or defective products.
What is striking is that the company and its management have not faced more consequences for this sorry track record.
Although the company has paid multiple fines and made numerous monetary settlements over the years, none have been big enough to affect its immense revenues. Furthermore, ultimately the monies used to pay them came from all Johnson & Johnson employees in the form of smaller paychecks; customers, patients and the public at large in the form of higher prices; and only to some extent by investors in the form of slightly lower profits. Meanwhile, it appears that the company's top managers made an immense amount of money, possibly in part as rewards for the revenues produced by the misadeventures.
Former Johnson & Johnson CEO William Weldon, upon his retirement in 2014, was to receive a retirement package estimated to be worth from $143 to $197 million (look here). In 2010, his total compensation was $29 million (look here). According to the 2012 Johnson and Johnson proxy statement, his 2011 total compensation was greater than $26 million. As far as I can tell, Mr Weldon never suffered any negative consequences for his company's sorry record, and retired a very rich man. (look here).
Current CEO Alex Gorsky received $25 million total compensation in 2014 (look here). More recently, the New York Times reported his 2017 total pay was $22.8 million, making him the seventh highest paid health care executive that year.
While management made so much money, very rarely has anyone who was involved in authorizing, directing, or implementing bad behavior had to suffer any negative consequences, therefore appearing to enjoy impunity.
So what was to deter management from embarking on further misadventures, as long as the results might be enlarging their personal wealth?
And why should we expect that this settlement will lead to any meaningful solution to the ongoing narcotics (opioid) epidemic?
Summary: Meaningless Settlements and the Impunity of Top Management
Nothing changes. We have seen many legal settlements by health care organizations of charges of fraud, bribery, and kickbacks. Often such behaviors appeared to risk patient harms. However, the companies involved usually paid tiny fines that relative to their revenues. Rarely did they have to admit responsibility, and almost never did a settlement cause company managers and leaders to suffer any negative consequences for enabling, authorizing, directing or implementing the bad behavior.
Thus it seems that US health care is
rigged to benefit top insiders and their cronies, and is part of a
larger rigged system. We have previously discussed how market fundamentalism (or
neoliberalism) led to deregulation, which enabled deception, fraud,
bribery, and intimidation to become standard business
practices, concentrating corporate power while top managers got rich. Other employees, patients, customers, vendors and suppliers, and the public at large
lost out. In health care, these changes led to an increasingly
costly system which produced increasingly bad results.
The "landmark" settlement by Johnson and Johnson should remind us of the reforms we have not achieved. However, to have a chance of truly reforming health care, we need to accomplish wholesale government reform. We need to excise the deception, crime and corruption at the heart of our government and restore government by the people, of the people, and for the people.
Appendix - A Look at Some of Johnson and Johnson's Legal Record 2010-2016
Derived from our previous blog posts -
2010
- Convictions in two different states for misleading marketing of Risperdal
- A guilty plea for misbranding Topamax
2011
- Guilty pleas to bribery in Europe by DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses (see this link for all of the above)
- A guilty plea to misbranding Natrecor by subsidiary Scios (see post here)
2012
- Testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post here).
- fined $1.1 billion by a judge in Arkansas for deceiving patients and physicians again about Risperdal (look here).
- announced it would pay $181 million to resolve claims of deceptive advertising again about Risperdal (see this post).
2013
- settled case by shareholders alleging that management made misleading statements and withheld material information about manufacturing problems (see this post)
- Janssen subsidiary pleaded guilty to a charge of misbranding Risperdal, and settled for a total of $2.2 billion allegations that it promoted the drug for elderly demented patients and adolescents without an indication, and despite evidence of its harms (see this post).
- DePuy subsidiary agreed to settle with multiple plaintiffs for $2.5 billion allegations that it sold defective mental-on-metal artificial hip, and hid evidence of its harms .
- Janssen subsidiary was found by two juries to have concealed harms of its drug Topamax (see this post for this and above case).
- Ethicon subsidiary's Advanced Surgical Products and two of its executives agreed to settle charges by US FDA that is sold mislabeled products used to sterilize equipment such as endoscopes (see this post).
- fined by European Commission for anticompetitive practices, that is, collusion with Novartis to delay marketing generic version of Fentanyl (see this post).
2014
- DePuy subsidiary settled Oregan state charges that it marketed the ASR XL metal-on-metal hip joint prosthesis without disclosing its high failure rate (see this post).
2015
- found by jury to have concealed harms of Risperdal.
- Ethicon subsidiary found by jury to have concealed harms of its vaginal mesh device.
- McNeil subsidiary pleaded guilty to marketing adulterated Tylenol. (see this post for three items above.)
2016
- subsidiary Aclarent settled allegations that it sold its Stratus device for unapproved uses. Two former executives of that subsidiary also were found guilty of distributing misbranded and adulterated devices (see this post)
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