NY regulator sues Johnson & Johnson for insurance fraud over opioid claims

New York state has filed civil charges accusing pharmaceutical giant Johnson & Johnson of insurance fraud for downplaying the risks of opioid painkillers, according to the state’s Department of Financial Services (DFS).

“The opioid crisis has taken too many lives, and New York 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,” New York Gov. Andrew 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.”

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

Johnson & Johnson manufactured several opioid products in New York state. The company also controlled a large portion of the opioid chain through its patented “Norman” poppy, a non-morphine-producing poppy plant which at one time was responsible for 80% of the global supply of raw materials for oxycodone, DFS said.

DFS alleged that Johnson & Johnson has “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.” The agency said that Johnson & Johnson’s efforts “amplified the medical community’s acceptance of opioid prescribing.”

The DFS’s allegations against the company include:

• Specifically targeting elderly patients as candidates for opioid treatment while minimizing the risks.
• Using branded marketing and “an arsenal of key opinion leaders and front groups” to characterize opioid addiction as a myth while peddling the idea of “pseudoaddiction” – the false concept that opioid patients showing signs of addiction simply needed more opioids.
• Receiving multiple warnings from the Food and Drug Administration about misrepresentations in marketing material for their opioid products.
• Developing the Norman poppy, which would become the raw material for some of the most widely used opioids – including oxycodone, the main ingredient of OxyContin.

The DFS alleged that Johnson & Johnson violated New York insurance regulations. Section 403 of the New York Insurance Law prohibits “fraudulent insurance acts.” It carries a penalty of up to $5,000 plus the amount of the fraudulent claim for each violation. DFS is alleging that that each fraudulent prescription for opioids should constitute a separate violation. Section 408 of the state’s 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. That law carries penalties of up to $5,000 per violation. Again, DFS alleged that each fraudulent prescription constitutes a separate violation.