Johnson & Johnson’s Brand Falters Over Its Role in the Opioid Crisis

In the 1980s, Johnson & Johnson needed a reliable supply of opium for a popular product, Tylenol with codeine.

So the health care conglomerate, better known for baby shampoo and Band-Aids, bought a business that grew and processed opium poppies in faraway Tasmania, off the coast of Australia. By 2015, at the height of the nation’s opioid epidemic, Johnson & Johnson was the leading supplier for the raw ingredients in painkillers in the United States.

It even developed a special strain of poppy, called Norman, that produced a core painkilling agent used in OxyContin, which would become Purdue Pharma’s blockbuster drug.

Purdue, the Sackler family that owns it and the nation’s major drug distributors, like McKesson, have gotten most of the blame for much of the opioid crisis.

But on Monday, a judge in Oklahoma singled out Johnson & Johnson, ordering it to pay the state $572 million and ruling that the company should be held responsible for decades of opioid addiction and the thousands of overdose deaths in the state.

The judge cited the company’s overly aggressive marketing tactics: Sales representatives were coached to avoid the “addiction ditch” — the negatives associated with drug use and dependence — when encouraging doctors to prescribe opioids for patients with moderate to severe pain.

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.

Some question how long the company can weather what has been 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.

“It’s fair to say that the opioid trial is probably the straw that broke the camel’s back for Johnson & Johnson’s reputation,” he said. “We’ve not in recent years seen Johnson & Johnson’s reputation dip as low as it’s currently tracking.”

Still, the price of the company’s stock rose slightly on Tuesday, by 1.44 percent to $129.64 a share, a sign that investors appeared relieved that the judgment — the state had asked for $17 billion — wasn’t higher. It’s also small compared to the $81.6 billion in sales that Johnson & Johnson reported in 2018.

“As silly as it sounds, a $600 million decision was, relative to expectations, a positive outcome,” said Joshua Jennings, an analyst for Cowen. “It was less onerous than many had expected.”

Many investors weren’t as sanguine about other opioid manufacturers, such as Teva Pharmaceutical Industries, Mallinckrodt and Endo International, whose stocks dipped significantly on Tuesday. More than 2,000 lawsuits are pending around the country, filed by states and cities pursuing a similar legal strategy to that of Oklahoma.

“Johnson & Johnson will survive this opioid crisis litigation,” Dr. Jennings said. “Other companies may not be in that position.”

In a statement on Monday, Johnson & Johnson described the judge’s decision as flawed and said Oklahoma had failed to present evidence that the company’s actions constituted a public nuisance, which was a central question of the trial. Purdue and Teva, had previously settled with Oklahoma and agreed to pay the state $270 million and $85 million, respectively.

Johnson & Johnson also defended its business as an opiate supplier, saying it had followed state and federal regulations and that the subsidiaries, which it sold in 2016, played no role in the marketing or sale of finished products. Beyond its poppy business, Johnson & Johnson drugs accounted for less than 1 percent of opioids prescribed in Oklahoma and the United States, the company said.

Although the Oklahoma judge ruled that Johnson & Johnson’s behavior violated the state’s public nuisance law, similar attempts to hold companies accountable for their harmful products have fallen short in other cases. Elizabeth Burch, a law professor at the University of Georgia, said that lawsuits using public nuisance laws had failed against gun manufacturers.

“You can draw an analogy there, mainly because once you sell a gun, it is no longer in the control of the gun manufacturers,” she said.

Andrew S. Pollis, a law professor at Case Western Reserve University, said pharmaceutical manufacturers may not be off the hook.

“You can have liability for manufacturing something that you know is being used to an illegal or a harmful end, or if you know the volume of your sales is upside down relative to the population,” he said. In Oklahoma, more than 326 million opioid pills were dispensed to state residents in 2015, enough for every adult in the state to receive 110 pills, according to the judge’s decision.

Some public health experts said companies should be held accountable when they supply ingredients that they should have known were causing harm.

“There would have been no OxyContin without J&J ramping up in Tasmania,” said Dr. Andrew Kolodny, the co-director of opioid policy research at the Heller School for Social Policy and Management at Brandeis University. He was a paid expert witness for the State of Oklahoma at the trial.

Dr. Kolodny, a longtime critic of Purdue, said public scrutiny should shift to other opioid manufacturers as well. “We’re getting to a point where I think scapegoating this family and this one company can be counterproductive, because other opioid manufacturers also contributed to the epidemic,” he said.

During the trial, the state of Oklahoma highlighted how Johnson & Johnson’s supplier subsidiaries, Noramco and Tasmanian Alkaloids, sought to increase their production of raw ingredients in 1994, the year Purdue sought approval from the Food and Drug Administration to sell OxyContin.

In anticipation, scientists at Tasmanian Alkaloids developed a new variety of poppy, called the Norman Poppy, that produced more thebaine, the pain-easing ingredient in OxyContin. The new poppy was described internally as “a transformational technology” that enabled the growth of oxycodone, the generic drug in OxyContin, according to the judge’s decision.

Through its subsidiaries, Johnson & Johnson eventually supplied opium-based ingredients for a range of drugs, including hydrocodone, morphine, codeine and buprenorphine.

At the same time that its supply units were processing opiates, Johnson & Johnson’s pharmaceutical subsidiary was promoting its own products in what was becoming a hotly competitive market for narcotic painkillers. The company, Janssen Pharmaceuticals, marketed Duragesic, a fentanyl-based patch, and Nucynta, a painkiller that it sold off in 2015.

Its marketing tactics followed a similar playbook to one Purdue and other opioid manufacturers were employing, and also included so-called unbranded promotion, which was not tied to specific products and encouraged doctors to continue to prescribe more opioids.

Like its competitors, Johnson & Johnson sought to persuade doctors that pain was under-treated, training sales representatives to use “emotional selling” to get across the idea that patients were being harmed by undertreatment. Another concept was “pseudoaddiction,” or the idea that if patients were asking a doctor for higher doses, they were not necessarily addicted but needed more of the drug to treat their pain.

The company has said it acted appropriately and that, ultimately, drugs are prescribed only on the advice of a doctor.

Still, researchers have repeatedly found that drug marketing can influence the behavior of doctors. “This sort of marketing can tilt the balance,” said Dr. Scott Hadland, an addiction specialist at the Grayken Center for Addiction at Boston Medical Center, who has studied the link between drug industry gifts to doctors and overdose deaths. Doctors “are human just like anybody else and they are affected by marketing.”

Johnson & Johnson has cultivated its reputation through decades of careful messaging and product management, said David Vinjamuri, a marketing consultant and professor who worked at the company in the 1990s. Doctors and hospital administrators were more inclined to trust Johnson & Johnson over other pharmaceutical companies, he said.

But in recent years, given its setbacks, “my fear now is that the systematic competitive advantage Johnson & Johnson got from its reputation has eroded,” Mr. Vinjamuri said. “Brand equity is a reservoir that floats you until it’s dry.”

Jan Hoffman contributed reporting to this article.

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Katie Thomas covers the business of health care, with a focus on the drug industry. She started at The Times in 2008 as a sports reporter. @katie_thomas

Tiffany Hsu is a breaking news reporter on the Business Desk. Before joining The Times in 2017 she covered economic news for The Los Angeles Times and earned an M.B.A. from Columbia University. @tiffkhsu

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