J&J's Penalty on Risperdal Marketing Violations Postponed by State Judge

A South Carolina judge today deferred a decision on the penalties he will impose on a Johnson & Johnson unit for violating consumer-protection laws in a case in which the attorney general seeks billions of dollars.

Circuit Judge Roger Couch ended a two-day hearing by saying Attorney General Alan Wilson and lawyers for J&J’s Ortho-McNeil- Janssen Pharmaceuticals unit had two more weeks to file written arguments.

Jurors ruled March 22 that Janssen sent doctors a misleading letter in 2003 on the safety and effectiveness of its antipsychotic drug Risperdal. The panel also said the letter and the drug’s package label violated the South Carolina Unfair Trade Practices Act.

“I obviously have received a great deal of information,” Couch said in the Court of Common Pleas in Spartanburg. “I’ll report to you once I have my findings.”

Lawyers for New Brunswick, New Jersey-based Janssen urged Couch to impose minimal damages. They said the letter sent to 7,194 doctors in South Carolina wasn’t untrue, and that no company had ever faced “substantial penalty” for a package insert approved by the U.S. Food and Drug Administration.

“The question is whether anybody was hurt,” Janssen lawyer Edward Posner argued today to the judge. “There’s no evidence that anybody was deceived, or that a doctor, patient or the state was harmed by the violation.”

$5,000 Per Violation

An attorney for South Carolina, Donald Coggins, urged the judge to impose the maximum penalty of $5,000 for each of thousands of violations. Those violations, the state argues, include as many as 722,000 Risperdal prescriptions written, 183,144 calls on doctors by Janssen sales representatives, and 496,565 sample boxes distributed.

“It is the public policy of the state of South Carolina that we don’t want companies coming in and engaging in unfair and deceptive trade practices,” he said. “For that law to have any teeth, the court needs to impose penalties that are significant and substantial. To do less, would not only make a mockery of this proceeding, it allow this behemoth to laugh at us.”

Risperdal’s global sales peaked at $4.5 billion in 2007 and declined after the company lost patent protection. It generated $3.4 billion in sales in 2008, or 5.4 percent of J&J’s total sales, according to company filings. Sales of the drug fell to $527 million last year, according to a January earnings report.

Risperdal Consta, the long-acting version of the antipsychotic drug, generated $1.5 billion in sales last year for Johnson & Johnson (JNJ), officials said this month.

Third State Trial

The case is the third of about 10 state lawsuits to be considered by jurors over J&J’s Risperdal marketing campaigns. In June, J&J won dismissal of Pennsylvania’s suit alleging the company hid the drug’s diabetes risk and tricked regulators into paying millions more than they should have for the medicine.

A Louisiana jury ordered the drugmaker in October to pay $257.7 million in damages to that state for making misleading claims about Risperdal’s safety. A judge later added $73 million in legal fees to the award.

A West Virginia judge in a 2009 non-jury trial awarded $3.95 million, finding the company misled doctors about the risks and benefits of Risperdal. The state dropped its Risperdal claim after J&J won an appeal, company officials said in February.

The case is State of South Carolina v. Janssen Pharmaceuticals, 2007-CP-42-1438, Circuit Court for Spartanburg County, South Carolina (Spartanburg).

To contact the reporters on this story: David Voreacos in Washington at dvoreacos@bloomberg.net; Gary Henderson in Spartanburg, South Carolina, at wgaryh@gmail.com.

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

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