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J&J Risperdal Letter Violated Consumer Law, Jury Finds

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(Corrects amount of potential penalties in second paragraph of story published March 22.)

March 22 (Bloomberg) -- A Johnson & Johnson unit violated consumer-protection laws by sending South Carolina doctors a misleading letter about the safety and effectiveness of the antipsychotic drug Risperdal, a jury concluded.

Jurors in state court in Spartanburg, South Carolina, deliberated more than six hours before finding today that J&J’s Ortho-McNeil-Janssen Pharmaceuticals unit engaged in “unfair and deceptive acts” by sending a 2003 letter touting Risperdal as better and safer than competing drugs to more than 7,000 doctors across the state. A judge will decide later whether the drugmaker should pay $36 million in penalties over the mailings.

“The verdict they handed down is just and speaks the truth,” John White, a Spartanburg-based lawyer representing the state, said in an interview. Jurors also found that J&J warning label information on Risperdal was deceptive.

The state’s case centered on drug-safety claims that New Brunswick, New Jersey-based J&J and Janssen made in November 2003 correspondence to about 700,000 doctors across the U.S., including 7,200 in South Carolina.

The U.S. Food and Drug Administration 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’ products.

‘Acted Responsibly’

“We are disappointed,” Greg Panico, a J&J spokesman, said in a statement. “Janssen acted responsibly and believes it did not violate” South Carolina law, he said.

South Carolina officials argued in the case that J&J sent the letter to protect billions of dollars in sales of the antipsychotic drug.

Risperdal’s global sales peaked at $4.5 billion in 2007 and declined after the company lost patent protection. Risperdal 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, J&J said in a January earnings report.

Risperdal Consta, the long-acting version of the antipsychotic drug, generated $1.5 billion in sales last year for J&J.

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.

Louisiana Verdict

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.

Under South Carolina’s unfair trade practices law, Janssen can be fined as much as $5,000 for each Risperdal letter sent to South Carolina doctors. Judge Roger Couch will decide the financial-penalty issue after an April 18th hearing.

“After the judge makes a determination as to damages, we will consider our options,” Panico said in his statement.

The case is State of South Carolina v. Janssen Pharmaceuticals, 2007-CP-4201438, Circuit Court for Spartanburg County, South Carolina (Spartanburg).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net; Gary Henderson in Spartanburg, South Carolina at wgaryh@gmail.com.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.