J&J Should Pay Texas $579 Million for Risperdal, Jury Told

Johnson & Johnson should reimburse at least $579 million to the Texas Medicaid system for fraudulently promoting its antipsychotic drug Risperdal for uses not approved by U.S. regulators, a state lawyer told jurors.

J&J, the world’s largest health care products company, is defending a lawsuit by Texas Attorney General Greg Abbott that claims the company and its Janssen unit overhyped and overcharged the state for the drug after its approval in 1993. J&J also promoted Risperdal for use by children before it got approval from the Food and Drug Administration, Texas claims.

By making false claims about the drug’s superiority and minimizing its side effects, J&J persuaded Texas Medicaid officials to pay 45 times more for Risperdal than for older types of drugs, Assistant Attorney General Cynthia O’Keeffe told jurors in opening a trial today in state court in Austin.

“This is a case about the systematic looting of money from the Texas Medicaid system by one of the oldest and largest drug companies in America,” O’Keeffe said.

Texas joined a lawsuit filed by a whistle-blower, Allen Jones, a former investigator for the Pennsylvania Office of Inspector General. An award of $579 million as sought by the state could be tripled by jurors under Texas law.

In addition, if the state wins the case, jurors will decide the number of violations and set a penalty of as much as $10,000 apiece.

Risperdal Sales

An attorney for Jones, Thomas Melsheimer, told jurors that J&J made $34 billion in Risperdal sales over 17 years.

J&J, based in New Brunswick, New Jersey, systematically minimized Risperdal’s health risks to establish it as a blockbuster drug, Melsheimer said.

He said the company made “a series of illegal payments” to Dr. Steven Shon, the former medical director of the Department of Mental Health and Mental Retardation in Texas, that “effectively made him a salesman for Risperdal” who promoted the drug around the U.S.

J&J denies wrongdoing and never acted illegally, attorney Stephen McConnico told jurors in his opening statement. He disputed the state’s contention that Risperdal was not superior to other drugs, saying it succeeded in the market because it was an improvement over an earlier generation of antipsychotics that had debilitating side effects.

He said doctors made the decision to prescribe Risperdal off-label, which is not illegal, because it worked so well.

No ‘Master Puppeteer’

“The idea that we’re some kind of master puppeteer that can control doctors all over the country” to prescribe what J&J wants is “simply not common sense,” McConnico said. “What did the doctors do? You bet they prescribed it. We don’t run away from that. We admit it. Because it worked.”

From 1994 to 2009, the Texas Medicaid program reimbursed for 2.75 million prescriptions for Risperdal, he said.

He said Risperdal has remained on the state’s preferred drug list even as the attorney general has investigated this case for several years.

“Actions speak louder than words,” McConnico said. “They wanted doctors to give it, and doctors wanted to give it.”

In his opening, Melsheimer cited an FDA letter centering on safety claims that J&J and Janssen made in November 2003 correspondence to 700,000 doctors. The FDA responded with a warning letter saying J&J made false and misleading claims that minimized the potentially fatal risks of diabetes and overstated the drug’s superiority to competitors.

Diabetes Risk

McConnico disputed the FDA claim that J&J hid the risk of diabetes, saying that the drug’s warning label mentioned the disease several times.

“The idea that we ever hid anything about diabetes is simply wrong,” he said.

In 1993, Janssen won FDA approval to sell the drug for psychotic disorders including schizophrenia. That market was limited, Melsheimer said, so the company promoted the drug off- label for many other uses, including dementia.

In 2003, the FDA approved Risperdal for bipolar disorder. In 2006, the regulator approved it for symptoms related to autism in children and teens. The FDA approved it to treat bipolar children and teens the next year. The drug was never approved for dementia.

Jurors heard videotaped testimony from a former Janssen executive who helped launch the drug, Thomas Anderson, and from Margaret Hunt, an investigator in the state’s civil Medicaid fraud division.

TMAP

The witnesses testified about a series of payments that Janssen made to Texas state officials involved with the Texas Medication Algorithm Project, known as TMAP. The Texas lawsuit claims that TMAP gave guidelines to doctors on the treatment of patients with mental illnesses. Those guidelines, Texas claims, favored Risperdal over other antipsychotics.

Hunt testified that the Robert Wood Johnson Foundation donated $2.8 million to TMAP, while J&J and Janssen gave $375,465. In turn, Janssen paid $942,659 to three doctors and their company, which helped develop and promote the guidelines, Anderson testified.

Hunt also described Janssen payments to several Texas state officials involved with TMAP, including Shon. He traveled around the U.S. to promote the TMAP guidelines, she testified.

The company lost a Risperdal case in Louisiana, where on top of a $257.7 million jury award the judge ordered the company to pay $73.3 million in attorneys’ fees and costs.

Marketing Practices

In South Carolina the company lost a $327 million judgment after a jury found the drugmaker liable for damages.

J&J and the Janssen unit have also been sued over marketing practices by Alaska, Arkansas, Louisiana, Montana, New Mexico, Pennsylvania and Utah. The Arkansas case is set for trial in March.

A suit filed by West Virginia was dropped after an appeals court set aside a nonjury trial judgment against the company. J&J won dismissal of the Pennsylvania case.

The case is State of Texas ex rel. Jones v. Janssen LP, D- 1GV-04-001288, District Court, Travis County, Texas (Austin).

To contact the reporters on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net; David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net; Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net.

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

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