Jan. 13 (Bloomberg) -- A whistle-blower who sued Johnson & Johnson over the marketing of its antipsychotic Risperdal told a jury he was fired after probing company payments to a top pharmacist in Pennsylvania’s government who hid the money.
Allen Jones testified yesterday in state court in Austin, Texas, that he was an investigator in the Pennsylvania Office of Inspector General in 2002 when he looked into an unregistered bank account run by Steven Fiorello, the pharmacist. Fiorello was on a Pennsylvania committee weighing whether to require doctors to give priority to newer, more expensive drugs like Risperdal in state-funded treatment of mental-health patients, Jones said.
Jones, 57, said he found a $4,000 check from J&J’s Janssen unit to Harrisburg State Hospital that was sent “to the attention of” Fiorello. The check covered a Fiorello trip to New Orleans to discuss Pennsylvania’s drug guidelines. Another check for $1,766 to the hospital account was sent “in care of” of Fiorello, Jones said. Fiorello controlled the account and didn’t register it with the state, Jones said.
“The account was used to deposit money from drug companies,” Jones said yesterday in the trial’s third day of testimony. “There were real problems here. On many levels, the account was improper.”
Janssen also paid $2,000 directly to Fiorello as an honorarium for his speaking at a company-sponsored event in 2002, Jones said. Jones said he followed the money trail and explored efforts by Janssen to promote, on a state-by-state basis, Texas guidelines favoring drugs like Risperdal. The funds sent to the hospital account helped pay travel expenses for programs related to setting up the Texas guidelines in Pennsylvania, he said.
The state adopted the guidelines that favored Risperdal in 2003, Jones said.
In 2004, Jones filed a whistle-blower lawsuit in Texas, which the state later joined, claiming J&J defrauded the state by overhyping Risperdal and overbilling its Medicaid program by at least $579 million.
J&J denies any wrongdoing in the Texas case.
Fiorello, once the chief pharmacist for Pennsylvania’s public welfare department, was convicted in December 2008 of felony conflict-of-interest charges for taking payments from drug companies, including Janssen and Pfizer Inc. He was sentenced to 18 months of probation and fined $3,000. He also paid more than $27,000 in civil fines after the Pennsylvania Ethics Commission cited him.
Jurors heard earlier that Steven Shon, a physician who served as medical director of the Texas Department of Mental Health and Mental Retardation, signed several consulting agreements with Janssen. The company paid him $47,587 over several years as he promoted the Texas Medication Algorithm Project, or TMAP, guidelines around the U.S., including in Pennsylvania. TMAP urged doctors to give preference to new antipsychotics like Risperdal.
Jones said he interviewed Janssen employees in 2002, and they told him they found no grant request for the payments of $4,000 and $1,766, which was “a real red flag for me,” Jones said. He also said Fiorello could not receive an honorarium under state regulations.
“The receipt of an honorarium by a public employee who acts in his official capacity is a felony,” Jones said.
He said Janssen employees said that company policy barred giving honorariums to state employees.
“They said they were unaware of this check and they didn’t know how it had happened,” Jones said.
‘Whole Lot More’
Asked about the meaning of the payments that went to the account, Jones said, “It meant that the state was going to be spending a whole lot more money for antipsychotics.”
J&J, based in New Brunswick, New Jersey, is the world’s largest health-care products company.
Jones said his boss told him to ease off his probe. He said he was told, “Stay away from the drug companies. This is a personnel issue. Stay away from the drug companies, stay away from TMAP.”
Jones said his boss said, “Drug companies write checks to both sides of the aisle. Stay away from it.” His boss told him that “morally and ethically I was correct, but politically, this was dead.”
Jones said that later he was removed as the lead investigator from the case, and he was “marginalized completely.” He continued to pursue the case on his own time, and spoke to the New York Times for a story that ran Feb. 1, 2004. He said he was fired for talking to the newspaper.
He sued in Texas in 2004. He could collect from 15 percent to 25 percent of any recovery that Texas gets at the trial. Jones said he also settled a freedom of speech civil rights lawsuit and a retaliation suit with Pennsylvania. With the settlement, he said he paid his debts, bought a truck, filled his propane tanks and had $1,200 left.
On cross-examination, Jones said he sued in Texas before he was fired after trying unsuccessfully in Pennsylvania to pursue the case.
The case is Texas v. Janssen LP, D-1GV-04-001288, District Court, Travis County, Texas (Austin).
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