Pharmaceutical Investing

The State of Ohio files a lawsuit against five pharma companies for their responsibility in the opioid crisis.

Who’s to blame for the severe opioid crisis affecting multiple cities in the US? According to some cities and states, it’s Big Pharma.
The State of Ohio has filed a lawsuit against five pharmaceutical companies – Purdue Pharma, Endo Health Solutions (NASDAQ:ENDP); Janssen Pharmaceuticals, a US-based arm of Johnson & Johnson’s (NYSE:JNJ); global pharmaceuticals segment Cephalon owned by Teva Pharmaceuticals (NYSE:TEVA); and Allergan (NYSE:AGN).
Ohio’s Attorney General Mike DeWine told NPR the state believes these companies willingly lied to doctors on the hazard pain medication had on patients. “[T]hey did so for the purpose of increasing sales,” DeWine said.

When asked about the potential for more and more cities and states to bring forth lawsuits like this one, DeWine said he would hope these places take a good look at the effect of pharmaceuticals on their locations.

More legal action taking place all over the country

The New York Times reported there are already similar suits occurring in Mississippi, Chicago, and counties in New York, California, and West Virginia.
“Ohio’s lawsuit seeks to recover money the state has spent on the drugs themselves, through programs like Medicaid, and on addiction treatment,” the Times stated.
A similar case took place this year where the city of Everett in Washington sued Purdue Pharma, claiming damages done to their population due to the company’s supplying OxyContin to “obviously suspicious physicians and pharmacies,” as NBC News reported.
Evaluating the feasibility of more of these suits following through, The Atlantic wrote about how in 1998, the tobacco industry saw 46 states and six other jurisdictions finding common ground through the “largest civil-litigation settlement agreement” in US history.
“In the settlement, which left the tobacco industry immune from future state and federal suits, the companies agreed to make annual payments to the states, in perpetuity, to fund public-health programs and anti-smoking campaigns,” the publication states.
The effects of the opioid crisis became even a presidential matter as then-candidate Donald Trump promised to “end the opioid epidemic in America.” However, since that campaign promise, the Trump administration took steps to reduce medication-assisted treatment.
The administration has also proposed a budget that would see a 95 percent cut to the federal government’s anti-drug response, the Office of National Drug Control Policy (ONDCP).
The American Society of Addiction Medicine released a report pointing there were in total 52,404 lethal drug overdoses in the US during 2015.

Investor Takeaway

As the crisis continues to take victims and leave governments helpless, the blame seems to be moving towards the companies that produced the product itself.
Even though the companies listed in this new lawsuit are not public, this should cause some pause for any investor considering placing any money on pharmaceuticals involved with opioids.
Don’t forget to follow us @INN_LifeScience for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.


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