J&J Pays Millions to Settle Billion-Dollar Risperdal Case

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Johnson & Johnson will pay $7.8 million to settle the state of Arkansas’s claims the company illegally marketed its Risperdal antipsychotic medicine, a case that featured a billion-dollar award against the drugmaker that was thrown out.

The settlement, less than 1 percent of the $1.2 billion fine imposed by an Arkansas judge, closes the book on almost eight years of legal jousting over allegations J&J misled doctors and patients about Risperdal’s effectiveness and downplayed its diabetes risks. An appeals court threw out the fines last year, and the state dropped its case Thursday as part of the accord.

The settlement comes as J&J continues to face side-effect claims over Risperdal, including suits by young males who blame the drug for causing them to develop breasts like women’s. The next case is slated for May 26 in state court in Philadelphia.

Judd Deere, a spokesman for Arkansas Attorney General Leslie Rutledge, said Rutledge is glad to have the matter resolved.

J&J and its Janssen unit aren’t admitting liability as part of the settlement, Michele Baer, a Janssen spokeswoman, said in an e-mailed statement. The accord “is a compromise reached in the interest of ending the litigation,” she said.

Other States

The original penalty was the largest of the four handed down against New Brunswick, New Jersey-based J&J, the second-biggest maker of health products, in state cases alleging the company hid Risperdal’s risks and tricked Medicaid regulators into paying more than they should have for the medication.

The other verdicts, in West Virginia, Louisiana and South Carolina, were either thrown out or reduced. The company agreed in the middle of a trial to pay $158 million to resolve Texas’s Risperdal marketing claims in 2012.

State officials in Mississippi and Kentucky are still pressing claims that Janssen duped doctors and patients about the drug’s effectiveness. The Kentucky case is set for trial next year while the Mississippi case doesn’t have a trial date, according to J&J’s May 1 securities filing.

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 the next year, or 5.4 percent of J&J’s total revenue. Its sales fell to $542 million in 2011, the last year the company provided figures for the medication.

While J&J racked up billions in Risperdal sales, it also shelled out $2.2 billion to resolve the federal government’s civil and criminal probes of its Risperdal marketing practices.

Wrong Law

Janssen pleaded guilty to a criminal charge tied to claims it marketed the drug for uses not approved by the U.S. Food and Drug Administration, including treating elderly dementia patients.

In overturning the verdict last year, the Arkansas Supreme Court concluded the state’s lawyers based their suit on the wrong law and Judge Tim Fox erred in handing down $1.2 billion in fines for violations of the state’s Medicaid-fraud statute.

Fox signed the state’s motion to dismiss the case as part of the settlement Thursday, said Robert Cowan, a Texas lawyer hired to help litigate the claim.

Arkansas’s take in the case will be reduced after $2 million of the settlement fund goes to cover the state’s legal fees, according to court filings. The Texas law firm of Bailey Peavy Bailey tried the case on behalf of the state. The firm had originally been slated to receive $181 million in fees based on the $1.2 billion fine.

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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