Johnson & Johnson Must Pay $1.1 Billion Penalty in Ark. Risperdal Case

Johnson & Johnson was ordered to pay more than $1.1 billion by an Arkansas judge after the jury found that the company’s officials misled doctors and patients about the risks of the antipsychotic drug, Risperdal.

Judge Tim Fox, in Little Rock, Arkansas, found that J&J, and its Janssen unit, committed more than 238,000 violations of the state’s Medicare fraud laws by illegally marketing Risperdal over a period of almost four years, starting in 2002.

The U.S. Justice Department is demanding that J&J pay close to $1.8 billion to resolve the civil claims by federal regulators and some state attorneys general, as was stated by people familiar with the settlement talks said earlier this month.

The judge found that each violation carried a $5,000 fine (for each prescription written).  Arkansas said at least 250,000 prescriptions might have resulted from illegal marketing. That would total the fine to at least $1.25 billion. This penalty is the largest of the three handed down so far against J&J in state cases, alleging that the second largest healthcare maker hid Risperdal’s risks and tricked Medicaid regulators into paying more than they should have for the medicine. It is felt that J&J and Janssen defrauded the Medicaid program by failing to properly outline the antipsychotic medicine’s risks and deceptively marketed the drug as safer and better than competing medicines.

The state also argued that both companies marketed the drug for “unapproved uses, including various symptoms in children and the elderly” after being warned by federal authorities to halt such sales.

The state said it would also seek damages over the misleading statements in the so-called “Dear Doctor” marketing letter the company sent to Arkansas doctors in 2003, which violates the state’s deceptive-trade practices law.  Arkansas officials will also seek penalties for more than 19,000 sales calls in which J&J representatives allegedly used the letter or made deceptive statements about Risperdal.

They also argued J&J and Janssen executives made false statements about the drug’s diabetes risks, as well as other side effects in its warning label.

J&J has been sued by a total of 11 state attorney generals, who contend the drug maker misled them about Risperdal’s safety and effectiveness, just to boost sales. The 11 states were seeking reimbursement for Medicaid or other public funds, which were paid on Risperdal prescriptions. The lawsuits alleged that J&J promoted the drug for dementia, mood and anxiety disorders, as well as other unapproved uses, while downplaying risks.

In June 2010, a judge threw out Pennsylvania’s lawsuit over the Risperdal marketing campaign in the midst of the trial. An appeal of that ruling is scheduled for next month. Four months later, jurors in Louisiana ordered the drug maker to pay almost $258 million to state officials for making misleading claims regarding Risperdal’s safety. J&J has appealed. In June 2011, a South Carolina judge ordered J&J to pay $327 million in penalties for deceptively marketing the medicine. The company has appealed that ruling.

J&J ended the most recent trial in Texas with a $158 million settlement in January.

“Three losses in a row means the company needs to become more realistic about its exposure and come up with an exit strategy in the form of a settlement,” Carl Tobias, professor of product-liability law at the University of Richmond law school, said in a telephone interview yesterday. “I think the judge was sending a message – either settle these cases or litigate them at your peril.”

The jurors found “Johnson & Johnson and Janssen Pharmaceuticals lied to patients and doctors because they cared more about profits than people.”  Since money is so important to them, perhaps after paying a $1,000,000,000 fine, they will learn an important lesson.

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