Earlier this week, a state court judge found that Johnson & Johnson and its Ortho-McNeil-Janssen subsidiary committed more than 230,000 violations of Medicaid fraud laws in connection with its sales and marketing of the antipsychotic drug Risperdal. The judge's ruling came on the heels of a jury finding that company officials misled doctors and patients about the risks of the medication. The defendants were fined $5,000 for each violation of the Medicaid fraud laws, and for each of more than 4,500 violations of trade practices laws as well -- resulting in a total fine of more than $1.2 billion.
This is the largest and latest drug litigation defeat for J&J, which lost earlier Risperdal cases in two other states. Experts on product liability law say this defeat, in particular, sends a clear message to J&J that it might want to adopt a more settlement-focused strategy with cases yet to be filed or currently pending in West Virginia and other states.
In addition to arguing that J&J defrauded the Arkansas' Medicaid program by failing to properly disclose the risks and side effects associated with Risperdal , state attorneys alleged that the defendant companies had also engaged in deceptive sales and marketing practices by falsely portraying Risperdal as being safer and better than competing medications.
A third argument alleged that the companies also marketed the drug as a treatment for various symptoms in children and the elderly -- even though the drug was unapproved for those purposes and despite being warned to stop the practice by federal authorities.
Arkansas Attorney General Dustin McDaniel lauded the ruling via e-mail saying that "(t)hese two companies put profits before people, and they are rightfully being held responsible for their actions."
A spokesperson for Janssen said the company has requested a new trial by motion and plans to appeal the verdict if that motion is denied. We will provide future updates on this drug litigation story as new developments warrant.
Source: Bloomberg News, "J&J Ordered to Pay $1.1 Billion Penalty Over Risperdal," Eric Francis, Jef Feeley and David Voreacos, April 12, 2012