Johnson & Johnson (JNJ) has come under increased pressure as lawsuits proliferate — something the company blamed on its prominence in the marketplace and zealous tort lawyers, CFO Joseph Wolk told Yahoo Finance on Tuesday.
The company posted better-than-expected earnings for the third quarter. Yet amid mushrooming challenges against the drug giant’s involvement in the opioid crisis and its own products on the market, JNJ held its legal reserves steady at $832 million — suggesting the company isn’t worried about the financial fallout.
The highest profile cases, which affects the companies three key business lines, include opioids, baby powder and an anti-psychotic drug called Risperdal. The latter was the subject of an $8 billion punitive damages judgement in a Philadelphia case, which is being appealed.
In an interview on Tuesday, Wolk blamed a litigious environment as the reason why JNJ has a target on its back, citing thousands of cases that have cropped up in the last few years.
“Life sciences has always been targeted,” he told On The Move. “We are targets, unfortunately, it’s the business in which ...we’ve decided to play in.”
Wolk added that “life sciences makes up about 50% of outstanding cases in product liability when there’s never been a safer time for these products or a more efficacious time for these products.”
‘Trying to drum up’ lawsuits
In JNJ’s quarterly earnings call Tuesday, Wolk lashed out at what he characterized as overzealous lawyers trying to milk a big money industry.
“This, to me is probably the poster child for how big a business plaintiffs attorneys have made this type of approach,” Wolk said, addressing controversy surrounding allegations that the company’s baby powder was tainted. Johnson & Johnson has vigorously pushed back against those claims, pointing out that all the verdicts have been overturned on appeal.
“The plaintiff’s bar in total has spent over $400 million this year alone in advertising on TV trying to drum up the class action suits,” he said. “It’s become a $36 billion industry.”
To date, Johnson & Johnson is facing at least $13 billion in exposure, which include the opioid verdict of $472 million in Oklahoma; a $20.4 million settlement in Ohio, and the recent $8 billion verdict in the Risperdal case. The company is appealing most of those, Wolk said.
Specifically on the $8 billion for punitive damages in the Risperdal case —which already saw a $680,000 award for compensation — Wolk said the company was confident it would be reduced.
“The judgement itself, based on U.S. Supreme Court precedent, would suggest that it’s really egregious. We don’t expect that to stand. We will appeal, certainly, the amount. You can expect that to come down.”
The company recently saw a favorable result in a jury trial in California, and an overturning of a $110 million verdict on Tuesday.
Anjalee Khemlani is a reporter at Yahoo Finance. Follow her on Twitter: @AnjKhem