N.Y. Gov. Cuomo Announces Insurance Fraud Action Against Johnson & Johnson for Leading Role in the Opioid Crisis

ALBANY, New York, Sept. 18 -- Gov. Andrew Cuomo, D-New York, issued the following news release on Sept. 17:

Governor Andrew M. Cuomo today announced the Department of Financial Services has filed charges and initiated administrative proceedings against Johnson & Johnson and its subsidiaries Janssen Pharmaceutica, Inc., Janssen Pharmaceuticals, Inc., and Ortho-McNeil-Janssen Pharmaceuticals, Inc. - collectively, "Johnson & Johnson." These charges are the fourth set to be filed against opioid manufacturers arising from the ongoing DFS investigation into the creators and perpetrators of the opioid crisis.

"The opioid crisis has taken too many lives and New York State will continue to take action against those who helped fuel this public health catastrophe and bring a measure of justice to families who have lost loved ones," Governor Cuomo said. "Misrepresentation of opioids to consumers for profit is inexcusable and we will use every tool necessary to help ensure those responsible are held fully accountable."

Superintendent of Financial Services Linda A. Lacewell said, "The opioid crisis has had a devastating impact on individuals, families, and communities across the nation. DFS remains committed to protecting New York consumers and ensuring the integrity of the insurance industry."

Johnson & Johnson manufactured a number of opioid products in New York State, most notably Schedule II drugs Duragesic, a fentanyl patch, and Nucynta, a tapentadol drug. In addition, Johnson & Johnson controlled a large portion of the raw opioid supply chain through its patented "Norman Poppy," which at one point was responsible for up to 80% of the global supply for oxycodone raw materials.

The DFS Statement of Charges alleges that the Johnson & Johnson Respondents have had a long-standing and multi-faceted leading role in originating, supplying, facilitating, and actively creating a dangerous market for opioids for chronic pain treatment. Their efforts not only supported sales of their own branded opioids but also established under false and fraudulent pretenses an environment that amplified the medical community's acceptance of opioid prescribing, thereby increasing demand for its opioid-related raw materials.

DFS's allegations against the Johnson & Johnson Respondents include the following:

* Through brochures and third-party publications, they specifically targeted elderly patients as candidates for opioid treatment, while minimizing the increased risks of opioid use to this more vulnerable population;

* Through branded marketing and the support and control of an arsenal of key opinion leaders and front groups, they characterized opioid addiction as a dangerous myth and advanced the idea of "pseudoaddiction" -- the false concept that patients showing clear signs of addiction were simply in need of even more opioid medication;

* They received multiple communications from the FDA warning them about misrepresentations in their Duragesic marketing materials. These misstatements included mischaracterizations of abuse data to claim that their opioid products were less addictive than other opioid products; unsubstantiated claims of low abuse potential and enhanced quality of life; and a complete lack of risk information about Duragesic's boxed warnings, contraindications, and side effects; and

* They developed a poppy in the 1990s that facilitated the supply of what would become broadly used opioids, including oxycodone, the main ingredient of OxyContin, which was manufactured by Purdue.

According to the DFS Statement of Charges, the Johnson & Johnson Respondents violated two New York Insurance Laws. Section 403 of the New York Insurance Law prohibits fraudulent insurance acts and carries with it penalties of up to $5,000 plus the amount of the fraudulent claim for each violation; DFS alleges that each fraudulent prescription constitutes a separate violation. Section 408 of the Financial Services Law prohibits intentional fraud or intentional misrepresentation of a material fact with respect to a financial product or service, which includes health insurance and carries with it penalties of up to $5,000 per violation; once again, DFS alleges that each fraudulent prescription constitutes a separate violation.

The hearing will be held at the office of the New York State Department of Financial Services, One State Street, New York, New York, beginning on January 25, 2021.

Read a copy of the DFS Statement of Charges for Johnson & Johnson and related companies on the DFS website https://www.dfs.ny.gov/industry_guidance/enforcement_discipline/ea20200909_johnson_and_johnson