Johnson & Johnson Paid Texas Official to Speak Around the U.S., Jury Told

Johnson & Johnson’s Janssen unit paid a Texas mental health official to speak around the U.S. about state guidelines on prescribing antipsychotic drugs that gave preference to medicines like the company’s Risperdal, the official said.

Steven Shon accepted honorariums to fly to Arizona, Florida and New Jersey to discuss Texas guidelines developed in 1999 advising doctors that a newer class of drugs like Risperdal were a “first choice or option” for schizophrenia, he testified today in state court in Austin. Texas is suing J&J, saying the company fraudulently promoted Risperdal and overbilled Medicaid by at least $579 million.

State lawyers say Janssen’s payments to Shon were part of a scheme to influence development of the guidelines, known as the Texas Medication Algorithm Project, or TMAP, and tout them as a model for other states trying to advise doctors on prescribing drugs. Shon was asked how often he went around the U.S. to talk to other states about the TMAP.

“I would say once or twice a month for a period of several years,” Shon said in a video deposition shown to jurors on the trial’s second day of testimony. “I knew that Janssen paid for a substantial number of those trips.”

Texas also claims that New Brunswick, New Jersey-based J&J, the world’s largest health-care products company, defrauded the state Medicaid program by promoting Risperdal for uses not approved by U.S. regulators, including for children with psychiatric disorders. The state joined a lawsuit filed by a whistle-blower, Allen Jones, a former investigator for the Pennsylvania Office of Inspector General.

Medical Director

Attorneys for Jones questioned Shon, who served as medical director of the Texas Department of Mental Health and Mental Retardation until he involuntarily retired in 2006.

Shon testified that he served on Janssen advisory boards, was a board member of a Janssen publication called “Mental Health Issues Today” and was a continuing medical education speaker in programs sponsored by the company.

Shon was asked about six trips in which he got honorariums of $3,000 from Janssen to discuss the TMAP project. In several cases, he kept those payments, he said.

In testimony yesterday, a Texas Medicaid investigator said Shon signed several consulting agreements with Janssen, and the company paid him $47,587 over several years.

Jones’s attorney Thomas Melsheimer asked Shon about Texas regulations that bar a public official from “soliciting, accepting or agreeing to accept any honorarium for doing services” that he wouldn’t be asked to provide “but for that person’s official position or duties.”

Outside of Texas

Shon said his TMAP talks outside of Texas didn’t conflict with his official duties, and he gave them during compensatory time. When asked about a 2000 trip to Scottsdale, Arizona, when his timesheet showed he was at work, he said: “It appears that things were not recorded correctly.”

On cross-examination, Shon said Janssen had no influence over the development of the TMAP guidelines.

He said a state attorney, Cathy Campbell, told him that his appearances in other states were proper. He said he usually gave his honorariums to the state, based on Campbell’s advice.

In those cases when he kept the payments, Shon said, the lawyer advised him that his actions were proper.

‘Something Wrong’

“Did anybody ever tell you that you were doing something wrong in conjunction with your work with TMAP?” a J&J attorney asked Shon.

“No,” he answered.

Shon said he left his state job when he was told “it was time to move on,” he testified.

“Did anybody ever tell you that you had done something wrong, and that’s why it was time to move on?” he was asked.

“No,” he said.

In his opening statement yesterday, Melsheimer said J&J made $34 billion in Risperdal sales after its launch in 1994.

J&J denies wrongdoing and never acted illegally, attorney Stephen McConnico told jurors yesterday in his opening statement.

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: David Voreacos in Austin at dvoreacos@bloomberg.net; Margaret Cronin Fisk in Detroit at mcfisk@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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