J&J Tosses Out Risperdal Fraud Verdict to the Tune of $1.2B

Source: Thinkstock

Source: Thinkstock

Johnson & Johnson (NYSE:JNJ) succeeded in persuading an Arkansas court to reverse a $1.2 billion decision against the company Thursday, according to a New York Times report. The case centered around the drugmaker’s marketing of its antipsychotic drug Risperdal; the judgement, which the court overturned, was one of the largest state fraud cases in history.

The decision was first imposed in 2012, in which a state court concluded that Johnson & Johnson had mislead consumers regarding its antipsychotic drug Risperdal by downplaying risks related to its use and improperly marketing the drug. Arkansas sued the company, claiming that Johnson & Johnson’s marketing of Risperdal violated the state’s Medicaid fraud law and its deceptive trade practices act.

Johnson & Johnson appealed the judgement on Thursday, and in a unanimous decision, the court overthrew the original ruling. The high court claims that the state “incorrectly tried to use a law governing health-care facilities as the basis for levying accusations,” according to Bloomberg.

“Janssen is indisputably not a healthcare facility,” Associate Justice Karen R. Barker wrote in the majority opinion on Thursday, which stated that the law doesn’t apply to drugmakers.

“We pursued this case based on the belief that the General Assembly intended to give the Attorney General’s Office the authority to pursue penalties against those that would enter our state and blatantly deceive the public,” said Arkansas Attorney General Dustin McDaniel in an e-mailed statement to Bloomberg on Thursday. “I am disappointed that the court viewed the law differently.”

Risperdal is used to treat schizophrenia and bi-polar disorder; the drug’s global sales peaked in 2007 at around $4.5 billion, and then declined after the company lost patent protection on the medicine. In 2008, the drug accounted for approximately 5.4 percent of Johnson & Johnson’s revenue, generating about $3.4 billion in sales.

Johnson & Johnson has been under fire for its aggressive marketing of Risperdal since 2010, and the drugmaker has since agreed to pay more than $2.2 million in order to settle criminal and civil probes over the sales of Risperdal and other medications. The company defended its Risperdal marketing practices in appeals throughout the country with increasing success.

“J&J appears to be on a roll in the appellate courts on these Risperdal cases,” Carl Tobias, a professor of product-liability law at the University of Richmond in Virginia said in an e-mail with Bloomberg. “It’s difficult to protect these kinds of deceptive-trade practices cases on appeal,” he added.

In January, the company saw similar results in a Louisiana appeal court; the company convinced the state’s Supreme Court to throw out a $258 million judgement. Judges said state prosecutors didn’t have enough evidence that the company had improperly marketed the drug.