Bloomberg News

J&J Duped Arkansas Doctors Over Risperdal, Lawyer Tells Jury

March 27, 2012

Johnson & Johnson (JNJ:US) officials repeatedly misled Arkansas doctors about the safety of the antipsychotic drug Risperdal, and the drugmaker should be held responsible for those deceptions, a lawyer said.

J&J’s Janssen unit made misleading claims about Risperdal’s health risks and effectiveness in a letter to more than 6,200 Arkansas doctors, violating the state’s deceptive-trade practices law, one of the state’s lawyers told a jury in Little Rock today. Arkansas is seeking more than $1.25 billion in penalties over the campaign.

“By the time this case is over, we will prove to you that Janssen lied about Risperdal’s dangers just to make money,” Fletcher Trammell, an attorney for Arkansas, told jurors in opening statements in the state-court trial over J&J’s Risperdal marketing tactics.

It’s the fifth jury trial over states’ claims that J&J, the second-biggest (JNJ:US) maker of health products, hid Risperdal’s diabetes risks and tricked Medicaid regulators into paying millions of dollars more than they should have for the medicine. J&J ended the most recent trial in Texas with a $158 million settlement in January. The Texas settlement won court approval today.

Proper Warnings

J&J has said it provided proper warnings about diabetes risks on Risperdal’s label and that U.S. regulators approved those disclosures. Efforts to tie labeling claims to Medicaid fraud should fail because “compliance with federal drug labeling statutes and regulations is not a condition of payment or participating in” a state Medicaid program, J&J said in a July 2010 court filing.

Janssen didn’t engage in deceptive trade practices and didn’t harm anyone, James Simpson, a company lawyer, told the jury today.

“The state will not present any evidence that a single person was injured while taking Risperdal,” Simpson said in his opening statement. “There will not be any evidence that the state of Arkansas lost a penny in paying for Risperdal for thousands of Arkansas citizens who needed the drug.”

Risperdal’s global sales peaked at $4.5 billion in 2007 and declined after the company lost patent protection. The drug generated $3.4 billion in sales in 2008, or 5.4 percent of New Brunswick, New Jersey-based J&J’s revenue (JNJ:US), according to company filings. Sales of the drug fell to $527 million in 2010, according to earnings reports.

Marketing Challenged

Along with contending that J&J and Janssen defrauded the Medicaid program by failing to properly outline the antipsychotic medicine’s risks on the warning label, Arkansas officials allege J&J officials deceptively marketed the drug as safer and better than competing medicines.

The state also argues that the 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, according to the state’s suit.

The U.S. has been investigating Risperdal sales practices since 2004, including allegations that the company marketed the drug for unapproved uses, J&J executives said in a U.S. Securities and Exchange Commission filing (JNJ:US) last year.

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

State Officials

Arkansas is asking the jury to find J&J and Janssen liable for illegally marketing Risperdal to dupe state officials into overpaying for the drug.

The state has said it will then ask Judge Tim Fox to fine J&J at least $5,000 for each prescription affected by the Risperdal marketing campaign. Arkansas says at least 250,000 prescriptions may have resulted from illegal marketing. That would amount to a fine of at least $1.25 billion.

The state said it also will seek damages for misleading statements made in a 2003 letter to Arkansas doctors touting Risperdal. Arkansas said it will also seek penalties for more than 19,000 sales calls in which J&J representatives allegedly used the letter or made other deceptive statements about the drug.

Trammell, the state’s lawyer, said that J&J and Janssen would argue at trial that Risperdal is effective as an antipsychotic.

‘It’s True’

“And it’s true, we don’t dispute it,” Trammell told jurors. “But that doesn’t give anybody a pass to lie about dangers. Just because the drug works that doesn’t mean they can break the law by lying about the drug’s risks.”

Simpson said Risperdal’s risks are minimal. By 2002, after “12.7 million patient years” of Risperdal use, only 311 adverse blood sugar events were known worldwide, a rate of 0.002 percent, he said.

“If my math is good, .002 is 10 feet in a mile. In other words,” he said, taking a few steps toward the jury box, ’’it’s that much in a mile. Ten feet. That’s how rare these incidents happen.’’ The rate of adverse events hasn’t changed since then, he said.

J&J and Janssen have been sued by 11 states seeking reimbursement for Medicaid or other public funds paid on Risperdal prescriptions. The lawsuits allege that J&J promoted the drug for dementia, mood and anxiety disorders and other unapproved uses, or downplayed risks.

Thrown Out

In June 2010, a judge threw out Pennsylvania’s suit over the Risperdal marketing campaign in the middle of a trial. An appeal of that ruling is set to be heard next month.

Four months later, jurors in Louisiana ordered the drugmaker to pay almost $258 million to state officials for making misleading claims about the drug’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.

The case is State of Arkansas v. Ortho-McNeil-Janssen Pharmaceuticals Inc., CV07-15345, Pulaski County Circuit Court (Little Rock).

To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net; Eric Francis in Little Rock, Arkansas, at eric.francis@yahoo.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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