J&J Unit Misled Pennsylvania Officials on Anti-Psychotic Drug, Lawyer Says

A Johnson & Johnson unit misled Pennsylvania officials about the health risks of its Risperdal anti-psychotic drug and duped the state into paying $289 million more than it should have for the medicine, a lawyer said.

Pennsylvania officials wouldn’t have paid a premium for Risperdal had they known it was no more effective than existing anti-psychotic drugs and was found to cause diabetes, Fletch Trammell, a lawyer for the state, told a Philadelphia jury today. Pennsylvania is seeking to recover $289 million it paid for Risperdal prescriptions.

“There were a dozen anti-psychotics that were just as good as Risperdal and cost a fraction” as much, Trammell said in opening statements in the trial of the state’s rebate lawsuit against J&J.

Risperdal generated $3.4 billion in sales in 2008, or 5.4 percent of sales for New Brunswick, New Jersey-based J&J. The drug, made by its Janssen Pharmaceutica unit, was one of J&J’s biggest sellers before patent protection expired.

J&J’s lawyer contended in his opening statement that the drugmaker did nothing wrong in marketing Risperdal to state- sponsored health-care programs.

“There is no merit in the case that” the state will present, Thomas Campion, J&J’s lawyer, told jurors today.

Off-Label Marketing

J&J faces hundreds of lawsuits by former Risperdal users alleging the company minimized the diabetes risk posed by the anti-psychotic medicine and overstated its benefits. Consumers contend the drugmaker boosted sales by marketing the drug for unapproved uses, such as treating dementia patients.

The Justice Department is investigating such practices within Janssen and other drugmakers. Nine states including Louisiana have sued J&J, claiming it violated a federal bar to off-label marketing, according to company regulatory filings.

Under U.S. law, a doctor can prescribe a medicine for any condition, as long as the U.S. Food and Drug Administration found it safe and effective for at least one ailment.

Drug companies, however, aren’t allowed to promote a drug for uses other than those approved by the FDA. Until 2003, Risperdal was approved only for psychotic disorders such as schizophrenia. It was never approved for dementia.

$13 Per Pill

Judge Frederica Massiah-Jackson has ruled the state can’t introduce evidence of J&J’s alleged off-label marketing practices in the rebate case. The Philadelphia Common Pleas Court trial is expected to last more than two weeks.

The state argues J&J inflated Risperdal’s prices by wrongfully touting the drug as safer than competitors such as Eli Lilly & Co.’s Zyprexa and AstraZeneca Plc’s Seroquel anti- psychotics. Researchers have concluded the drugs all pose the same diabetes risk, Pennsylvania officials contend.

J&J ignored repeated admonitions from the FDA to stop claiming Risperdal was superior to other anti-psychotics, Trammel said. At the height of J&J’s Risperdal marketing campaign in Pennsylvania, the state paid $13 per pill for the medicine, he said.

The company counters that Risperdal’s benefits in treating mentally ill patients outweigh its diabetes risk, and Pennsylvania regulators appear to have agreed with that assessment by keeping the medicine on the state’s preferred-drug list.

Business Plans

Campion noted the FDA repeatedly found Risperdal to be a safe and effective treatment for schizophrenia and other mental illnesses.

The fact that J&J officials talked about marketing strategies in business plans for Risperdal didn’t prove the company mishandled the drug, the lawyer added.

“We have always been committed to ethical business practices and we are fully prepared to defend ourselves against these claims,” Greg Panico, a Janssen spokesman, said in a written statement today.

J&J rose 4 cents to $59.77 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have declined 7.2 percent this year.

The case is Commonwealth of Pennsylvania v. Janssen Pharmaceutica Inc., 002181, Philadelphia Court of Common Pleas (Philadelphia).

To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; Jef Feeley in Philadelphia at jfeeley@bloomberg.net.

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