J&J Slammed With $1 Billion Fine

J&J Slammed With $1 Billion Fine

April 12th, 2012 // 1:38 pm @ jmpickett

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In a huge blow to Johnson & Johnson, an Arkansas judge has fined the healthcare giant and its Janssen subisdiary more than $1.1 billion one day after a jury found the companies downplayed and hid risks – notably, diabetes and weight gain – associated with its Risperdal antipsychotic drug. The jury decided J&J engaged in “false or deceptive acts” by sending a 2003 letter to thousands of doctors claiming Risperdal was safer than other antipsychotics.

In issuing his ruling, Judge Tim Fox found nearly 240,000 violations under the state Medicaid fraud law, and each violation came with a $5,000 fine, setting the total penalty at more than $1.1 billion. And he issued an additional $11 million fine for more than 4,500 violations under the state’s deceptive practices act.

A J&J spokeswoman sends us this statement: “We are disappointed with the judge’s decision on penalties. If our motion for a new trial is denied, we will appeal.” She goes on to argue that “the state did not show any Arkansas patient was ever harmed by using Risperdal, that any Arkansas physician or Arkansas Medicaid was ever misled by the label or package insert, or that the state ever paid for a prescription that was not properly written and eligible for reimbursement.”

The verdict comes three months after J&J agreed to pay $158 million to settle a similar lawsuit brought by the Texas attorney general, who charged Janssen with orchestrating a controversial program that was allegedly designed to boost Risperdal use in the public sector throughout the country. J&J settled one week after the case went to trial amid increasingly damaging testimony. The Texas attorney general had sought $1 billion in damages (look here).

Overall, J&J has not fared well in defending its Risperdal efforts. Last year, the health care giant was ordered by a South Carolina judge to pay $327 million for deceptive Risperdal marketing, which he called detestable (see this). And in 2010, a Louisiana jury ordered J&J to pay $257.7 million in damages for making misleading safety claims, and $73 million in legal fees were later added.

In fact, the string of losses suggests J&J needs to pursue a settlement strategy. You may recall a deal with the feds unraveled after the health care giant balked at paying more than $1 billion. That deal had been reached prior to the recent settlement in Texas, however, prompting the feds to then seek a higher payout (read here). Sources says the feds want J&J to pay anywhere from $1.3 billion to more than $1.8 billion and the Arkansas fine may embolden them to stand their ground.

“Johnson & Johnson needs to wake up and realize they are playing a losing game. They should be running, not walking, to the settlement table,” Patrick Burns of Taxpayers Against Fraud, a non-profit, tells us. “DoJ offered a global settlement for $1.8 billion last month. I am not sure that deal is going to stay on the table after this.”

J&J has scored a couple of victories, though. A lawsuit brought by Pennsylvania officials, who charged J&J hid the risk of diabetes and misled state regulators into paying millions more than they should have for the medicine, was dismissed (see here). And two years ago, a West Virginia judge awarded $3.95 million, after finding J&J misled doctors about risks and benefits, although the state dropped its claim after J&J won an appeal.

Previous Risperdal verdicts against J&J include a $327 million civil penalty in South Carolina