J&J To Settle Criminal Charge Over Risperdal Marketing, While 40 States Plan Lawsuits
August 10th, 2011 // 1:06 pm @ jmpickett
As Johnson & Johnson attempts to resolve a raft of litigation and government investigations related to Risperdal marketing, attorney generals from approximately 40 states are deciding whether to pile on as they pursue a coordinated civil investigation into potential consumer fraud violations, according to a filing with the Securities and Exchange Commission.
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In order to make their case, the states and J&J reached a so-called tolling agreement, which essentially delays the expiration of a statute of limitation for filing a lawsuit. The disclosure was made in a J&J filing with the US Securites and Exchange Commission (see page 32). The move is the latest indication J&J is working toward a global settlement. By reaching a tolling agreement, J&J is creating more opportunity to allow negotiations to be completed. Without such a deal, the states would be forced to file lawsuits in order to preserve their rights.
At the same time, the health care giant disclosed that an agreement in principle was reached to settle a misdemeanor criminal charge related to marketing its Risperdal antipsychoticl, but certain undisclosed issues remain open before a settlement can be finalized, according to the SEC filing.
You may recall that, earlier this year, J&J set aside an unspecified amount of money to be used for settlements. The Office of the Inspector General of the United States Office of Personnel Management, the US Department of Justice, the US Attorney in Philadelphia and Attorneys General of multiple states have been probing off-label Risperdal marketing for years (read here).
The states may be smelling blood. In June, a South Carolina judge ordered J&J to pay $327 million for deceptive Risperdal marketing, and last fall, a Louisiana jury ordered J&J to pay $257.7 million in damages for making misleading safety claims, although $73 million in legal fees were later added. In explaining his decision, the South Carolina judge labeled J&J actions “detestable†(see this).
In terms of simple math, the loss in South Carolina can be looked at least two ways – the average loss has so far cost about $150 million (four state lawsuits) or roughly $300 million (when considering two actual defeats). Using this figure as a hypothetical, if one were to multiply either figure times another half dozen losses in state courts, J&J is rapidly approaching at least $1 billion in damages. And reports have suggested the health care giant may settle for $1 billion, although the tab may now be rising.
Meanwhile, Massachusetts earlier this month filed a lawsuit alleging that Johnson & Johnson illegally marketed its Risperdal antipsychotic to the detriment of its citizens. This time, Massachusetts alleges J&J promoted the drug to treat elderly dementia and various unapproved uses in children and adolescents (read here). Other states, including Alaska, Arkansas, Mississippi, Montana, New Mexico, Pennsylvania and Utah, also have pending lawsuits.
J&J has scored some victories. A lawsuit filed 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. 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.
As we have noted previously, J&J will appeal the losses in Louisiana and South Carolina, and could possibly pay much less than the penalties awarded. By suggesting a global deal might total $1 billion or so, the health care giant may try to get the amounts reduced on a proportionate basis, and use the same argument in talks with any state that does not join a settlement. But if more states file lawsuits, the costs could rise. Perhaps the timing of the Massachusetts lawsuit is not a coincidence.
One looming case is scheduled to go to trial this November in Texas. And J&J potentially faces a much bigger liability in that Texas has a much larger population than Louisiana and South Carolina and, therefore, would encounter a heftier payout. This case, by the way, also involves statutory and common law fraud issues that were not raised in the other states. The focus is on the so-called TMAP program that was allegedly designed to boost Risperdal prescriptions by unduly influencing University of Texas professors and state officials to endorse the effort and promote it nationally.
Source: Pharmalot
