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Pharma Company Being Sued by Newark Gets $40M In State Tax Credits

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Two New Brunswick residents face federal charges of operating an online pharmacy to sell opioids that netted hundreds of thousands of dollars. Credits: Tap Into file photo
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NEWARK, NJ - A pharmaceutical company being sued by Newark for its alleged role in the overprescription of opioids just received a major tax break from the state of New Jersey.

The city in 2017 sued several opioid manufacturers, including Teva Pharmaceuticals USA, for alleged “deceptive” marketing strategies that led to the overprescription of opioids. In late June, Teva Pharmaceuticals received a $40 million tax credit over a 10-year period from the state Economic Development Authority to encourage the company to locate its new headquarters in Parsippany.

The deal is expected to bring 843 new high-paying jobs to New Jersey.

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City spokesman Frank Baraff said the lawsuit is still proceeding. "The city is moving forward full steam ahead with its lawsuit and that has no connection with what the state EDA is doing,” Baraff said.

The case was transferred from Superior Court to federal district court in June, records show. The lawsuit is one of many across the nation that has been consolidated by a judicial panel and handed to Northern District of Ohio Court Judge Dan Aaron Polster, The New York Times reported in March.

Purdue Pharma L.P. and its subsidiaries are also named in the suit and developed OxyContin in the mid-1990s, the lawsuit said. The city alleges that Purdue and other opioid manufacturers helped to "cultivate a narrative" that pain was under-treated and that that it should be a "higher priority" for health care providers.

"Overdoses and addiction have driven crime in the city and first responders are armed with Narcan as a matter of course, at city expense," the lawsuit said, referring to the opioid antidote drug. The city is suing for damages and alleged the opioid manufacturers are in violation of the state's Consumer Fraud Act and accused them of creating a public nuisance. 

Mayor Ras Baraka last year said the has city felt the "substantial financial impact" of the opioid epidemic.

“The impact of prescription opioids on Newark has been catastrophic,” Baraka said in a statement that initially announced the city’s lawsuit. “As the largest city in New Jersey and due to the duty we have to our citizens, we know it is our responsibility to act and protect our residents from this urgent public health crisis.”

Gov. Phil Murphy, meanwhile, praised Teva's move to New Jersey. The company expects to transfer and create 843 jobs and retain 232 existing position with a median annual salary of about $128,000, the governor’s office said in a press release.

“The presence of global life sciences companies like Teva Pharmaceuticals is critical to New Jersey’s ability to strengthen a thriving innovation ecosystem,” Murphy said in a statement. “We are thrilled to expand our welcome to Teva, and its more than 1,000 employees, in the Garden State – the place to be for the world’s most competitive life sciences companies.”

The governor and Baraka are strong allies. The mayor showed support for Murphy’s budget proposal amid legislative pushback last month, and the governor also noted the “importance of Newark” in the state budget at Baraka’s inauguration.

A press aide for Murphy declined to comment when asked if the governor knew of the city’s lawsuit.

The EDA, which approved the tax credits, requires applicants for credits to answer a legal questionnaire, said the agency's spokeswoman, Virginia Pellerin. Teva also has an ongoing obligation to report any concluded legal matters on an annual basis to the EDA, Pellerin added.

“If in the future a pending matter results in a negative outcome, the EDA would review the matter to determine if it impacts the award,” she said.

Teva made the EDA aware of its pending opioid litigation, the EDA spokeswoman said. Unresolved litigation is not a factor in the agency’s decision granting tax credits, per the EDA’s regulations.

Responding to the suit, Teva said it complies with federal and state regulations and is developing non-opioid treatments.

“Teva is committed to the appropriate use of opioid medicines, and we recognize the critical public health issues impacting communities across the U.S. as a result of illegal drug use as well as the misuse and abuse of opioids that are available legally by prescription,” said Teva spokeswoman Elizabeth DeLuca.

The company is globally headquartered in Israel with the U.S. headquarters based in North Wales, Pa. It's still negotiating a lease for office space in Parsippany for its new headquarters in New Jersey, DeLuca said.

Teva will still have a presence in Pennsylvania, DeLuca added. 

The lawsuit now includes as defendants Purdue Pharma L.P.; Purdue Pharma Inc.; Purdue Frederick Company; Ortho-McNeil-Janssen Pharmaceuticals, Inc.; McKesson Corporation; Mallinckrodt LLC; Johnson & Johnson; Janssen Pharmaceutical Inc.; Insys Therapeutics, Inc.; Endo Pharmaceuticals Inc.; Endo Health Solutions Inc.; Cephalon Inc.; Cardinal Health Inc.; and AmerisourceBergen Drug Corporation. 

Essex County has the highest rate of suspected opioid-related deaths in the state so far this year, according to data published by the state Attorney General's Office. Since January, there have been a suspected 202 opioid-related deaths and Naloxone -- more commonly known as the brand name Narcan -- has been used 591 times, the data said. 

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