Pharmaceutical and Healthcare Lawsuits

Key Takeaways

• Walgreens to pay $300 million to resolve allegations it unlawfully dispensed and billed for millions of opioid and controlled substance prescriptions, with an additional $50 million penalty if sold or merged before 2032.

• Federal investigation reveals systemic failures at Walgreens, including filling prescriptions with clear red flags and pressuring pharmacists to prioritize speed over safety.

• Landmark compliance measures imposed, including seven years of DEA oversight and a five-year Corporate Integrity Agreement with HHS-OIG to prevent future violations.

Walgreens Boots Alliance and its subsidiaries have agreed to pay $300 million to settle federal allegations that the company illegally dispensed millions of invalid prescriptions for opioids and other controlled substances over more than a decade.

The U.S. Department of Justice said the settlement marks one of the largest civil settlements involving the Controlled Substances Act in U.S. history, following a sweeping investigation led by the DOJ, Drug Enforcement Administration, and Department of Health and Human Services Office of Inspector General. The settlement also resolves False Claims Act allegations related to billing federal health programs for these prescriptions.

Pattern of negligence

From August 2012 to March 1, 2023, Walgreens pharmacies allegedly filled prescriptions that lacked legitimate medical purposes or were not written in the usual course of professional practice. The DOJ claims these included excessive quantities of opioids, early refills, and so-called “trinity” drug combinations — a cocktail of opioids, benzodiazepines, and muscle relaxants known to heighten overdose risk.

The complaint further claimed that Walgreens' corporate leadership fostered a profit-over-safety culture, where pharmacists were pressured to fulfill prescriptions at breakneck speed without adequate due diligence. Compliance staff allegedly withheld crucial data on suspicious prescribers from frontline pharmacists and discouraged internal alerts about high-risk prescription activity.

The settlement

While Walgreens denies liability, it has agreed to the $300 million payment based on its ability to pay. Should the company undergo a sale, merger, or transfer before fiscal year 2032, it will be required to pay an additional $50 million.

“This Department of Justice is committed to ending the opioid crisis and holding bad actors accountable for their failure to protect patients from addiction,” said Attorney General Pamela Bondi. “Pharmacies have a legal responsibility to prescribe controlled substances in a safe and professional manner, not dispense dangerous drugs just for profit.”

In the debate over the high cost of prescription drugs, pharmacy benefit managers are hotly contested. PBMs, the middlemen in many prescription drug transactions, say they help keep costs from being even higher.

Critics, on the other hand, claim PBMs add on unnecessary costs and make drugs even more expensive.

The Federal Trade Commission has weighed in on the issue, saying the three largest PBMs made more than $7.3 billion over the last five years by marking up the prices of generic drugs used to treat cancer, HIV and other diseases.

The FTC has singled out CVS Caremark, Express Scripts and OptumRx, accusing the companies of driving up prescription costs for consumers. Issue just a week before the end of the Biden administration, the FTC report is the strongest statement yet that holds PBMs accountable for high drug prices, an issue the incoming administration has vowed to address.

Big mark-ups

The report focuses specifically on generic “specialty” drugs that treat specific chronic diseases. The report claims that PBMs marked up prices for specialty generic drugs by hundreds and sometimes thousands of percent over their estimated acquisition costs from 2017 and 2022, noting that spending on these drugs more than doubled from $113 billion in 2016 to $237 billion in 2023. The report says there is no reason these drugs should have increased in cost by this much.

“Historically, specialty drugs were characterized by their need for special handling and administration,” the report’s authors wrote. “This is no longer necessarily the case. There is no standard definition for a specialty drug, and today specialty drugs may be characterized by a variety of factors, including their high cost.”

The report found that most of the highly marked up drugs were sold at pharmacies that were affiliated with the PBMs. The report also said that the three companies cited in the report almost always reimbursed their affiliated pharmacies at a higher rate for the drugs than unaffiliated pharmacies.

PBMS have pushed back against the FTC’s criticism. In September, ExpressScripts sued the FTC, saying a previous critical report was filled with "unsupported innuendo." 

Astellas Pharma US, Inc. has issued a recall for one lot of PROGRAF 0.5mg (tacrolimus) and one lot of ASTAGRAF XL 0.5mg (tacrolimus extended-release) capsules. These products are being recalled because the bottles may contain empty capsules.

Transplant patients who consume empty PROGRAF or ASTAGRAF XL capsules may experience rejection of the transplanted organ, tissue, or cells, due to underimmunosuppression. 

In the case of life-sustaining organ transplants such as a heart transplant, for which there is no permanent substitute such as hemodialysis in the case of a failed kidney transplant, if the transplant fails, the consequences of rejection initiated by ingesting empty capsules may be fatal. Astellas has not received any reports of adverse events related to this recall.

PROGRAF and ASTAGRAF XL are immunosuppressive medicines, used in conjunction with other medicines, to help prevent organ transplant rejection. PROGRAF is used in people who have had kidney, heart, liver, or lung transplants and ASTAGRAF XL is indicated for use in people with kidney transplants.

The affected lot numbers and expiration dates are:

No other formulations or doses of the product are impacted, and sufficient supply of unaffected stock is available to replace the recalled lots. The product was distributed nationwide to wholesale and retail outlets.

What to do

Astellas is notifying its customers via a drug recall notification letter and is arranging for the return of the impacted product. Wholesalers or pharmacists with questions about the recall process should contact 1-877-575-3437 during office hours 9 am to 5 pm EST, Monday through Friday.

Patients who have an affected lot should contact their physician or healthcare provider. Patients and physicians with questions should contact Astellas Medical Information at 1-800-727-7003 During office hours from 9 am to 5:30 pm EST, Monday through Friday.

Adverse reactions or quality problems experienced with the use of this product may be reported to the FDA's MedWatch Adverse Event Reporting program either online, by regular mail or by fax.

CVS is the latest drugstore chain to face a federal lawsuit over its handling of opioid drugs.

The U.S. Department of Justice has filed a civil complaint against the nation's largest pharmacy chain for allegedly filling unlawful prescriptions in violation of federal laws. 

The complaint, unsealed in Providence, Rhode Island, accuses CVS of violating the Controlled Substances Act and the False Claims Act by dispensing prescriptions for controlled substances without legitimate medical purposes and seeking reimbursement from federal healthcare programs for these prescriptions.

The allegations span from October 17, 2013, to the present, with claims that CVS filled prescriptions for excessive quantities of opioids and dangerous drug combinations, known as "trinity" prescriptions, which include an opioid, a benzodiazepine, and a muscle relaxant. The DOJ asserts that CVS ignored warnings from pharmacists and internal data about the illegitimacy of these prescriptions, prioritizing corporate profits over patient safety.

"The practices alleged contributed to the opioid crisis and opioid-related deaths, and today’s complaint seeks to hold CVS accountable for its misconduct," said Deputy Assistant Attorney General Brian Boynton.

U.S. Attorney Zachary A. Cunha for the District of Rhode Island echoed these sentiments, highlighting the devastating impact of opioid abuse on communities.

The list of charges

The lawsuit also points to CVS's corporate policies, which allegedly pressured pharmacists to meet performance metrics at the expense of legal compliance. CVS is accused of maintaining insufficient staffing levels, preventing pharmacists from sharing critical information about prescribers, and facilitating the illegal distribution of opioids by so-called "pill mill" prescribers.

If found liable, CVS could face substantial civil penalties for each unlawful prescription and treble damages for prescriptions reimbursed by federal programs. The court may also impose injunctive relief to prevent future violations, potentially mandating changes to CVS's compliance programs.

GNMART is recalling all lots of Force Forever for joint pain, 60 tablets packaged in a white plastic bottle with a red cap, labeled as "FORCE FOREVER." A Food and Drug Administration analysis has found the product to contain undeclared diclofenac and dexamethasone.

Diclofenac is a non-steroidal anti-inflammatory drug, commonly referred to as NSAIDs. NSAIDs may cause increased risk of cardiovascular events, such as heart attack and stroke, as well as serious gastrointestinal damage, including bleeding, ulceration, and fatal perforation of the stomach and intestines. 

Dexamethasone is a corticosteroid commonly used to treat inflammatory conditions. Corticosteroid use can impair a person’s ability to fight infections and can cause high blood sugar levels, muscle injuries and psychiatric problems. GNMart has not received any reports of adverse events related to this recall.

The product is used as a dietary supplement for joint pain and is packaged in bottles with 60 tablets. The affected product includes all lots and expiration date: 03/27/2030. The product was distributed nationwide via the internet at gnmart.com.

What to do

GNMart is notifying its customers by email and is arranging for return of all recalled products. Consumers who have a product that is being recalled should stop using it and return it to the place of purchase. Consumers may return the products to the address below via mail:

GNMart, Inc., 15 Sawmill Ln, Dover Plains, NY 12522

Consumers with questions regarding this recall can contact GNMart at info@gnmart.com by e-mail 24 hours a day and can expect a 24 to 48-hour response time, Monday - Friday, 9 am-5 pm EST. Consumers should contact their physician or healthcare provider if they have experienced any problems that may be related to taking or using this drug product.

Adverse reactions or quality problems experienced with the use of this product may be reported to the FDA's MedWatch Adverse Event Reporting program either online, by regular mail or by fax.

After years of consumer lawsuits claiming Johnson & Johnson Baby Powder caused cancer, the pharmaceutical giant has proposed spending $8.9 billion to settle all of the cases, which number close to 40,000.

The company continues to deny that talc in the product caused cancer but said it is willing to spend the money to put the issue behind it. In a statement, the company said the claims "are specious and lack scientific merit."

But who exactly would get a share of the money? Personal injury lawyers representing plaintiffs in one of the cases say women who used Johnson & Johnson Baby Powder and were later diagnosed with ovarian cancer – along with their families – would likely be eligible for “significant” compensation.

The firm, Pintus & Mullins, says the talc that was present in the powder also contained asbestos, a known carcinogen. 

“Johnson & Johnson (J&J) has a long history with Asbestos,” the firm says on its website. “The earliest reports of asbestos in J&J talc products date back to 1957-1958. Many victims have been exposed to asbestos through J&J baby powder.”

Johnson & Johnson denies any link to cancer-causing ingredients in its product. Even so, the company removed talc from its baby powder in 2020.

The court must approve

Before anyone receives compensation the settlement must be approved by the court. Legal analysts say approval is likely since a large number of the plaintiffs and their lawyers have backed the proposal.

Johnson & Johnson created a subsidiary corporation, LTL Management, to pay the claims. The subsidiary has already declared bankruptcy.

Mikal Watts of the law firm Watts Guerra and TalcPowderJustice.com said the $8.9 billion settlement would be the largest products liability settlement ever realized after a bankruptcy filing. 

Even if the bankruptcy court approves the settlement plaintiffs might not see any money for years. Lawyers involved in the case said they expect the money to be paid out over a 25-year period.

Johnson & Johnson has reached a settlement with New York Attorney General Letitia James, resolving charges that it helped fuel the opioid crisis. The company will pay $230 million to the state of New York.

“The opioid epidemic has wreaked havoc on countless communities across New York state and the rest of the nation, leaving millions still addicted to dangerous and deadly opioids,” James said in announcing the agreement. “Johnson & Johnson helped fuel this fire, but today they’re committing to leaving the opioid business — not only in New York but across the entire country.”

Under the agreement, James said Johnson & Johnson subsidiary Janssen Pharmaceuticals will no longer manufacture or sell opioid drugs in the U.S. In its own statement, Johnson & Johnson said it decided in 2020 to stop producing painkillers in the U.S.

“The settlement is not an admission of liability or wrongdoing by the company, and it is consistent with the terms of the previously announced $5 billion all-in settlement agreement in principle for the resolution of opioid lawsuits and claims by states, cities, counties and tribal governments,” the company stated. 

The settlement also removes Johnson & Johnson as a defendant in a larger opioid suit brought by the state that is scheduled to begin this week.

How the money will be used

James said the $230 million dollars to be paid by Johnson & Johnson will fund a program to prevent opioid abuse, provide treatment for those who are addicted, and support drug education efforts.

“While no amount of money will ever compensate for the thousands who lost their lives or became addicted to opioids across our state or provide solace to the countless families torn apart by this crisis, these funds will be used to prevent any future devastation,” James said.

The settlement is the latest chapter in a decade-long battle by states and local governments to hold pharmaceutical companies accountable for the epidemic of opioid addiction in the U.S. State and federal actions are pending against a number of companies.

In March, bankrupt Purdue Pharma, which made the opioid painkiller Oxycontin, proposed a payment of $4.28 billion. The offer was an increase from the $3 billion in the original settlement proposal. To date, the offer has not been accepted.

On Tuesday, the Supreme Court rejected Johnson & Johnson’s appeal of a multibillion dollar talcum powder verdict. 

The case was brought by 22 women who said they developed ovarian cancer as a result of using the company’s talc products. Johnson & Johnson argued that it didn’t get a fair trial. Without providing further explanation, the justices decided Tuesday to reject the company’s appeal.  

A Missouri jury initially awarded the women nearly $5 billion, but a state appeals court dropped two plaintiffs from the suit and cut the damage award down to around $2 billion. 

All of the women involved in the case (of which nine have died) used Johnson & Johnson's Baby Powder and Shower to Shower Shimmer Effects. Both products are made with talcum powder, and the suit claims the powder was contaminated with the cancer-causing substance asbestos. 

Company defends itself

Johnson & Johnson has denied that its talc products contain asbestos and that asbestos-laced talc can cause ovarian cancer. 

The company, which is currently facing thousands of lawsuits over the possible link between cancer and talc, called the verdict in the Missouri trial “at odds with decades of independent scientific evaluations confirming Johnson’s Baby Powder is safe, is not contaminated by asbestos and does not cause cancer.” 

However, the Supreme Court wasn’t asked to decide whether the products caused cancer. It was asked to consider the company’s argument that the Missouri courts unfairly combined the cases of the women from different states. The severity of each woman’s cancer varied, and some had a genetic or family predisposition for cancer. 

The justices ruled in favor of the women by rejecting the company’s appeal on Tuesday.

Johnson & Johnson has stopped selling talcum-based baby powder in the United States and Canada, but it remains on the market elsewhere. The American Cancer Society has said "it is not clear if consumer products containing talcum powder increase cancer risk.” 

The state of New York has filed a civil fraud complaint against Johnson & Johnson, charging the pharmaceutical company and its subsidiaries of marketing opioid drug products while downplaying their risks.

The complaint, filed by the New York Department of Financial Services (DFS), contends that the company specifically targeted elderly patients for opioid treatment despite known risks and used its marketing materials to brand opioid addiction as a myth.

"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," said New York Gov. Andrew Cuomo. "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."

Johnson & Johnson did not immediately provide a comment or response to media outlets that requested one.

Specific allegations

Regulators say Johnson & Johnson manufactured a number of opioid products in New York, including the Schedule II drugs Duragesic, a fentanyl patch, and Nucynta, a tapentadol drug. The state’s complaint also alleges that the drug company 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 percent of the global supply for oxycodone raw materials.

The crux of the DFS complaint claims 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 complaint alleges that Johnson & Johnson not only tried to sell more of its own opioid drug products but sought to create an environment in which the medical community was comfortable prescribing these powerful painkillers for patients, increasing the demand for Johnson & Johnson’s opioid-related raw materials. 

Charged with violating insurance laws

The state is hanging its case on insurance laws, which may explain why the complaint originated at DFS and not the attorney general’s office. DFS charges Johnson & Johnson of violating two state statutes.

Section 403 of the New York Insurance Law prohibits fraudulent insurance acts, and 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.

Those laws carry a penalty of up to $5,000 per violation, with the state alleging that each prescription found to be fraudulent constitutes a separate violation.

Johnson & Johnson has recently faced other opioid-related charges in other states, including Ohio and Oklahoma. 

A group of state attorneys general are seeking $26.4 billion from three major drug firms and Johnson & Johnson, The Wall Street Journal reported on Tuesday. 

Citing sources familiar with the matter, the Journal said about a dozen states are seeking to help pay for damages created by addiction to opioid drugs manufactured and sold by the companies. 

The drug companies -- which include McKesson, Amerisourcebergen, and Cardinal Health -- are accused of marketing the pain pills in a way that “overstated” their benefits and minimized their risks. Distributors are also accused of failing to stop an influx of suspicious orders. 

“We believe this latest settlement proposal would be viewed as a favorable outcome and would expect the stocks to react positively to the news as a global settlement would put the uncertainty behind,” JP Morgan analyst Lisa Gill said.

More than 3,000 lawsuits have been filed by states, local governments, and Native American tribes contending that drug companies helped fuel the opioid addiction epidemic through misleading marketing of the drugs. 

Litigation on the issue ultimately prompted OxyContin-maker Purdue Pharma to file for bankruptcy in September 2019.  

A New Jersey state court jury has ordered Johnson & Johnson to pay $750 million in damages to four plaintiffs who claimed asbestos in the company’s talc powder products caused their lung cancer.

The judge in the case said she will lower the amount of the damages, but it will still be the most ever awarded to claimants suing Johnson & Johnson over their illness. The company said it will appeal.

The damages award was the final phase of a trial that began last year. The jury initially awarded the plaintiffs $37.3 million in compensatory damages. Judge Ana Viscomi of New Jersey Superior Court said state law limits punitive damages to five times the amount of compensatory damages, therefore the punitive damage award would be lowered to around $186.5 million.

The trial focused on the safety of two of the company’s powder products, Johnson & Johnson Baby Powder and Shower to Shower.

Plaintiffs claim the products contained asbestos

This was the latest case in which consumers of Johnson & Johnson powder products brought an action against the company, claiming the powder contained small amounts of asbestos, a cancer-causing substance.

Johnson & Johnson has vigorously denied that is the case. In the trial, Johnson & Johnson CEO Alex Gorsky took the stand and testified that the company took extensive measures to make sure that its powder products containing talc were safe and did not contain asbestos.

In rendering its punitive damages verdict, the jury found otherwise. It found Johnson & Johnson was responsible for causing the plaintiffs to suffer from mesothelioma, a form of lung cancer.

Basis of appeal

Attorneys for Johnson & Johnson immediately served notice that they would appeal the court’s verdicts in both phases of the trial. They point to what they called “numerous legal errors” that prevented the jury from hearing “meaningful evidence.”

Johnson & Johnson insists that it has always acted responsibly and points to more than 40 years of testing that it says has confirmed that Johnson’s Baby Powder is safe, doesn’t contain asbestos, and doesn’t cause cancer.

But in a report last year, Reuters quoted officials of the Food and Drug Administration (FDA) as saying it isn’t accurate to say the powder products have always been free of asbestos. The officials noted that Johnson & Johnson had already recalled nearly 33,000 containers of baby powder after the FDA said it found trace amounts of asbestos in powder taken from a container the agency purchased online.

Consumers might rightly wonder how asbestos, a known carcinogen, could end up in a commercial talc powder product. According to Mesothelioma.com, a site sponsored by a law firm handling mesothelioma cases, talc is often naturally found near asbestos in the earth. It says the talc can easily become contaminated by the toxin while being mined.