Bloomberg News

J&J Appeals $1.2 Billion Arkansas Risperdal Ruling

July 20, 2012

J&J Files Appeal of $1.2 Billion Arkansas Risperdal Ruling

Johnson & Johnson and its Janssen unit are seeking to have Arkansas’ highest court consider laws that prohibit “imposition of excessive fines,” the company’s attorneys said in the filing. Photographer: Daniel Acker/Bloomberg

Johnson & Johnson (JNJ:US) appealed an Arkansas judge’s decision to fine the drugmaker $1.2 billion over what state officials said was a misleading marketing campaign for the company’s antipsychotic drug Risperdal.

Lawyers for J&J, the world’s biggest health-products maker, asked the Arkansas Supreme Court today to throw out a ruling by Judge Tim Fox that the company misled doctors and patients about Risperdal’s risks and should pay fines for almost 240,000 violations of the state’s Medicaid laws, according to court filings.

J&J and its Janssen unit are seeking to have the state’s highest court consider laws that prohibit “imposition of excessive fines,” the company’s attorneys said in the filing.

The penalty is the largest of the three handed down so far against New Brunswick, New Jersey-based J&J in state cases alleging the company hid Risperdal’s risks and tricked Medicaid regulators into paying more than they should have for the medicine.

“We anticipated that the defendants would appeal this decision, but are confident that the verdict of an Arkansas jury will be upheld,” Aaron Sadler, a spokesman for Arkansas Attorney General Dustin McDaniel, said in an e-mailed statement.

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 J&J’s revenue (JNJ:US), according to company filings. Sales of the drug fell to $527 million in 2010, according to earnings reports.

Risperdal Probe

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

The state’s lawyers also argued that J&J 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 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 last year.

The U.S. Justice Department is demanding that J&J pay $2.2 billion to resolve civil and criminal claims over Risperdal marketing pressed by federal regulators and some state attorneys general, people familiar with the settlement talks said in June.

Litigation History

J&J and Janssen face suits from at least seven other states seeking reimbursement for Medicaid or other public funds paid for Risperdal prescriptions.

In June 2010, a judge threw out Pennsylvania’s suit over the Risperdal marketing campaign in the middle of a trial. An appeals court is considering whether to reinstate the case.

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

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

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net

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


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