April 11 (Bloomberg) -- Johnson & Johnson officials misled Arkansas doctors and patients about the risks of the antipsychotic drug Risperdal, and the company’s marketing campaign violated consumer-protection laws, a jury ruled.
Jurors in state court in Little Rock, Arkansas, deliberated about three hours yesterday before finding J&J and its Janssen unit engaged in “false or deceptive acts” by sending a 2003 letter touting Risperdal as safer than competing drugs to more than 6,000 doctors across the state. The state is seeking more than $1.25 billion in penalties over the Risperdal marketing campaign, and a judge will decide later whether to fine J&J.
It’s the third jury verdict against J&J, the second-biggest maker of health products, in cases where states alleged the drugmaker hid Risperdal’s risks and tricked Medicaid regulators into paying more than they should have for the medicine. Louisiana and South Carolina juries also found the company’s Risperdal marketing violated consumer-protection laws.
“Three losses in a row means the company needs to become more realistic about its exposure and come up with an exit strategy in the form a settlement,” Carl Tobias, who teaches product-liability law at the University of Richmond in Virginia, said in a phone interview.
Teresa Mueller, a spokeswoman for J&J’s Janssen unit, said the drugmaker was disappointed with the Arkansas jury’s ruling.
“It is our position that an individual state should not penalize a pharmaceutical company for using an FDA-approved package insert or decide for itself whether a company complies with FDA rules,” Mueller said in an e-mailed statement.
‘Lied To Patients’
Arkansas Attorney General Dustin McDaniel said in an e-mailed statement that he filed the suit because he believed Arkansas residents deserved to be protected from “fraud and deceptive practices.”
He said that jurors found “Johnson & Johnson and Janssen Pharmaceuticals lied to patients and doctors because they cared more about profits than people.”
Risperdal’s global sales peaked at $4.5 billion in 2007 and declined after the company lost patent protection. The drug generated $3.4 billion in sales in 2008, or 5.4 percent of New Brunswick, New Jersey-based J&J’s revenue, according to company filings. Sales of the drug fell to $527 million in 2010, according to earnings reports.
Along with contending that J&J and Janssen defrauded the Medicaid program by failing to properly outline the antipsychotic medicine’s risks, Arkansas officials alleged J&J officials deceptively marketed the drug as safer and better than competing medicines.
The state also argued the companies marketed the drug for “unapproved uses, including various symptoms in children and the elderly” after being warned by federal authorities to halt such sales.
The U.S. has been investigating Risperdal sales practices since 2004, including allegations that the company marketed the drug for unapproved uses, J&J executives said in a U.S. Securities and Exchange Commission filing last year.
The U.S. Justice Department is demanding that J&J pay about $1.8 billion to resolve the civil claims by federal regulators and some state attorneys general, people familiar with the settlement talks said this month.
Arkansas officials asked jurors to find J&J’s Risperdal marketing campaign violated the state’s deceptive-trade practices law by making false and deceptive statements about the drug in the letter to doctors.
They also argued J&J and Janssen executives made false statements about the drug’s diabetes risks and other side effects in its warning label
The state will now ask Judge Tim Fox to fine J&J at least $5,000 for each prescription affected by the Risperdal marketing campaign. Arkansas said at least 250,000 prescriptions may have resulted from illegal marketing. That would amount to a fine of at least $1.25 billion.
The state said it also will seek damages over the misleading statements in the so-called “Dear Doctor” marketing letter the company sent to Arkansas doctors in 2003.
Arkansas officials also will also seek penalties for more than 19,000 sales calls in which J&J representatives allegedly used the letter or made other deceptive statements about the drug.
Fox said he’d hear arguments today about the state’s requests for penalties, but didn’t say whether he’d issue his ruling at that time. “Let’s get this matter resolved,” he told lawyers for both sides after the jury verdict.
J&J and Janssen have been sued by 11 states seeking reimbursement for Medicaid or other public funds paid on Risperdal prescriptions. The lawsuits allege that J&J promoted the drug for dementia, mood and anxiety disorders and other unapproved uses, or downplayed risks.
In June 2010, a judge threw out Pennsylvania’s suit over the Risperdal marketing campaign in the middle of a trial. An appeal of that ruling is set to be heard next month.
Four months later, jurors in Louisiana ordered the drugmaker to pay almost $258 million to state officials for making misleading claims about the drug’s safety. J&J has appealed.
In June 2011 a South Carolina judge ordered J&J to pay $327 million in penalties for deceptively marketing the medicine. The company has appealed that ruling. J&J ended the most recent trial in Texas with a $158 million settlement in January.
The case is State of Arkansas v. Ortho-McNeil-Janssen Pharmaceuticals Inc., CV07-15345, Pulaski County Circuit Court (Little Rock) Arkansas.
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