South Carolina Judge upholds $327M verdict for J&J marketing

By Linda A. Johnson AP Business Writer TRENTON, N.J. (AP) -- A South Carolina judge has upheld a $327 million civil penalty against health giant Johnson & Johnson, which in March was found guilty by a jury of overstating the safety and effectiveness of its former blockbuster antipsychotic drug, Risperdal. Attorneys for the state said Wednesday that it's the biggest verdict in the country over the marketing of Risperdal. The pill for schizophrenia and bipolar disorder once brought J&J more than $3.4 billion in annual sales. But it's been mired for years in litigation over alleged kickbacks, promotion for unapproved uses and other efforts to boost Risperdal over competing drugs. Dozens of pending state and federal cases allege illegal marketing practices for Risperdal, including one set for trial on Jan. 9 in which Texas is seeking more than $1 billion. Texas has joined a whistle-blower's lawsuit over alleged kickbacks paid more than a decade ago to several doctors who were state officials in the state's mental health department to give Risperdal preference over other antipsychotic drugs. One is accused of accepting honoraria from J&J to fly around the country urging doctor colleagues in other states' Medicaid and mental health programs to use Risperdal over other drugs, said Thomas Melsheimer, who represents whistle-blower Allen Jones and is co-counsel with the Texas Attorney General in the case. In the South Carolina case, Circuit Court Judge Roger Couch in Spartanburg on Tuesday denied Johnson & Johnson's motions asking him to order a new trial or overturn or amend the verdict. "This paves the way for the company to file an appeal," Mark Wolfe, a spokesman for New Brunswick, N.J.-based J&J, wrote in an e-mail. "The company acted responsibly and believes it did not violate the South Carolina Unfair Trade Practices Act." On March 22, a jury in the Spartanburg Court of Common Pleas found after a monthlong trial that Johnson & Johnson and subsidiary Janssen Pharmaceutica Inc., which makes Risperdal, violated that law by giving doctors deceptive information about the drug's risks and effectiveness. "During the trial, there was compelling evidence in the form of internal e-mails from J&J employees and officials" that the marketing staff was promoting the drug as better than what the science showed, said John B. White Jr., one of the attorneys who presented the case for South Carolina. White told The Associated Press that a competing antipsychotic drug, Eli Lilly & Co.'s Zyprexa, had become the top-selling drug in the class, so J&J ratcheted up its marketing. "There was tremendous pressure for Johnson & Johnson ... to make claims that Zyprexa has all of these problems and Risperdal doesn't," White said. In November 2003, Janssen sent "letters to doctors indicating it was safer than other drugs" in the same class, White said. "They indicated the side effects were much less common than they were." Risperdal and similar antipsychotic drugs have been linked to increased risk of strokes and death in elderly dementia patients, seizures, major weight gain, onset of diabetes and potentially fatal high blood sugar, plus many more common but less-serious side effects. Risperdal, approved in 1993, was one of Johnson & Johnson's top-selling drugs until the mid-2000s, when the company launched a twice-a-week injection called Risperdal Consta. Doctors switched most patients to the injected version and sales of the daily pills declined, then dropped off even further when original Risperdal got generic competition in June 2008. On June 3, Judge Couch ordered J&J to pay civil penalties amounting to $327.1 million. That's the total of fines of $4,000 for each of more than 43,000 letters touting Risperdal that Johnson & Johnson distributed to doctors, plus $300 each for 509,000 free samples given to doctors that contained detailed package inserts describing the medication's effects and safety. Wolfe, the J&J spokesman, wrote that the company doesn't believe disseminating a package insert approved by the Food and Drug Administration violates South Carolina's unfair trade law, adding, "We do not believe the ruling can be upheld on appeal." In January 2010, federal prosecutors joined two other whistle-blower cases against J&J. In their complaint, Assistant Attorney General Tony West and U.S. Attorney Carmen Ortiz in Boston alleged J&J paid tens of millions of dollars in kickbacks and rebates so nursing homes would put more patients on Risperdal, including dementia patients for whom the drug was not approved, and on other J&J drugs. A spokeswoman for Ortiz said Wednesday the two sides are still exchanging documents and taking depositions. Meanwhile, Risperdal marketing and promotion is the subject of other criminal and civil federal investigations. Likewise, states including Alaska, Arkansas, Louisiana, Massachusetts, Mississippi, Montana, New Mexico, Pennsylvania, Texas and Utah have pending cases against J&J, according to a recent company regulatory filing. Those cases seek reimbursement of Medicaid payments for Risperdal, compensation for treating patients who suffered adverse reactions, penalties for violations of state consumer fraud statutes, damages for "overpayments" or other fines or penalties. In the Louisiana case, which was tried in October 2010, a jury found that J&J violated the state's Medicaid Fraud Act and the company was fined about $258 million in damages, plus $73 million for the state's legal expenses. Johnson & Johnson's appeal of that verdict is pending. In the Pennsylvania lawsuit, related to the sale of Risperdal to its Medicaid program, a trial judge dismissed the case after the state presented its evidence in June 2010. Pennsylvania in April 2011 filed an appeal, which is pending. The regulatory filing also noted that the attorneys general of about 40 states "have indicated a potential interest in pursuing similar litigation against" J&J and have obtained agreements to stop the clock on the statute of limitations "while they pursue a coordinated civil investigation ... regarding potential consumer fraud actions in connection with the marketing of Risperdal." Published: Mon, Dec 26, 2011