Breaking Down Opioid Settlements
SCOTT SIMON, HOST:
This week, we got a look at how drug companies are being held responsible for the opioid crisis. According to reports, Purdue Pharma and the Sackler family that owns it might try to resolve all claims against the company for up to $12 billion. Well, in Oklahoma, Johnson and Johnson was fined over $500 million by a court. But is justice really being done?
Michelle Mello of Stanford Law School joins us now from Palo Alto. Professor, thanks so much for being with us.
MICHELLE MELLO: A pleasure.
SIMON: I want to start with a question I think a lot of people might be wondering - why no criminal charges?
MELLO: Well, criminal charges in cases like this are quite rare. There have been maybe one or two cases where a drug company executive has been held criminally responsible for its marketing practices, but it's considered an extraordinary remedy. And there are some things we can criticize about that. And there are ways in which it really makes sense.
SIMON: Well, tell us about the ways in which they really make sense.
MELLO: Well, one way is that the schemes at issue here were really sprawling. This was not just one man doing something criminally inappropriate but rather pervasive, longstanding, industry-wide conspiracy, for lack of a better word, to promote these products.
And, you know, there may be a false sense of vengeance or accountability in pinning it on one individual and essentially letting others go free who were the ones that carried out this scheme. You could argue that the deterrent effect of legal action would be greater with a massive financial penalty that would really send a message to all other executives at all levels of a corporation that this could be their economic downfall.
SIMON: Did we see that with the $500 million judgment in Oklahoma? Is that a big enough penalty to be a deterrent, or is it just the cost of doing business for Johnson and Johnson?
MELLO: I think for a company on the scale of Johnson and Johnson, $570 million is not a lot of money. And we saw that in Wall Street's reaction to the verdict. To them, it was good news. This was probably the first time that having to pay $572 million was considered good news.
But let's just keep in mind that was just Oklahoma. Still at large is the massive federal multi-district litigation where Johnson is also a defendant. But then 48 out of the 50 states have also brought separate state-level litigation. And then there are a smattering of individual class actions as well.
SIMON: It is part of the challenge here that there are people who successfully use opioid painkillers and rely on them?
MELLO: I think that is part of the challenge. You know, sometimes we get caught up in the culpable behavior of a drug company as, you know, maybe we should. But we have to remember that at their heart, they make products that we want. We want these companies to continue in business because not only do we want their opioids, we want the other products that they make, and we need those products.
This is not like a Juul or a tobacco company where we might think, well, the world might be better off if they weren't in business. No, we need these companies to stay in business. The question is how to use the law to send incentives to behave responsibly while they're making those products.
SIMON: As you watch these opioid cases move through the legal system, do you think justice is on its way to being done?
MELLO: I think it probably is. The verdict in the Johnson and Johnson trial really suggests that the theories that the plan has put forward are going to be applicable to all the other claims that they're bringing in these other lawsuits. The real question for me is what will that money end up being used for, and how do we ensure that it goes toward addressing the problem that the litigation was intended to address.
SIMON: Do you have an answer to that question?
MELLO: We know from the tobacco litigation that, particularly in times of recession or when state budgets are straining, the temptation to raid these honey pots can just be overwhelming. We know from tobacco that in most states, very little of that money actually ended up going towards tobacco-use prevention and treatment. So, you know, media watchdogs can help. Consumer watchdog groups can help ensure it. But the courts aren't going to be involved in administering how those settlement funds are used, so it remains really an open question whether they will be used in the way that they're supposed to be.
SIMON: Michelle Mello of Stanford Law School, thanks so much.
MELLO: Thanks for having me.
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