[Koran-Digital] US judge fines drug giant $1.1 billion

US judge fines drug giant $1.1 billion
6:24 AM Thursday Apr 12, 2012

An Arkansas judge fined Johnson & Johnson and a subsidiary more than US
$1.1 billion after a jury found that the companies downplayed and hid
risks associated with taking the antipsychotic drug Risperdal.

Circuit Judge Tim Fox determined that Johnson & Johnson and its
subsidiary, Janssen Pharmaceuticals Inc., committed nearly 240,000
violations of the state's Medicaid fraud law - or one for each Risperdal
prescription issued to state Medicaid patients over a 3½-year period.
Each violation carried a US $5,000 fine, the state's mandatory minimum
amount, bringing the total to more than $1.1 billion.

Fox issued an additional US $11 million fine for more than 4,500
violations under the state's deceptive practices act, but he rejected
the state's request to levy fines in excess of the $5,000 minimum for
the Medicaid violations.

Attorney General Dustin McDaniel said in an emailed statement that the
ruling "sends a clear signal that big drug companies like Johnson &
Johnson and Janssen Pharmaceuticals cannot lie to the (U.S. Food and
Drug Administration), patients and doctors in order to defraud Arkansas
taxpayers of our Medicaid dollars."

Janssen issued a statement in which it said, "We are disappointed with
the judge's decision on penalties.

If our motion for a new trial is denied, we will appeal."

The Arkansas Supreme Court would hear the appeal.

Janssen attorney Ed Posner argued during Wednesday's penalty hearing
that there was no evidence that harm had been done to people who were
prescribed Risperdal or to the state's Medicaid program, and that the
state's mandatory penalties were therefore inappropriate. At the
beginning of the hearing, the companies unsuccessfully lobbied the judge
to declare the penalty portions of the Medicaid fraud and deceptive
practices laws ruled unconstitutional.

Arkansas was one of several states to sue over Risperdal. A South
Caroline judge upheld a US $327 million civil penalty against the J&J
and Janssen in December. Meanwhile, Texas reached a US $158 million
settlement with the companies in January in which the company didn't
admit fault.

Hours after the ruling, shares of New Brunswick, New Jersey-based
Johnson & Johnson were down 24 cents, to US $64.00.

Jurors in Arkansas were not told about the financial stakes during 10
days of testimony, beyond that Janssen could have seen a US $200 million
swing in its revenues if it issued alarming warnings that the drug could
cause weight gain, diabetes and other health effects. If upheld, the
award would go toward the state's Medicaid fund, which is facing a
projected US $400 million deficit next year.

Risperdal, introduced in 1994, is a "second-generation" antipsychotic
drug that earned Johnson & Johnson billions of dollars in sales before
generic versions became available several years ago. It is used to treat
schizophrenia, bipolar disorder and irritability in autism patients.
Risperdal and similar antipsychotic drugs have been linked to increased
risk of strokes and death in elderly dementia patients, seizures, weight
gain and diabetes.

The 12-person jury deliberated for three hours Tuesday before deciding
in favor of the state.

Janssen continued to maintain after the verdict that it did not break
the law, pointing out that the package insert included with the
medication was approved by the U.S. Food and Drug Administration.

At the start of Wednesday's hour-long hearing, Fox said the Arkansas
Supreme Court had ruled in a 1969 case that fines could not be found
excessive, and thus unconstitutional, based simply on a large number of
violations.

The ruling represents a political victory for McDaniel, who is expected
to run for governor in 2014.

The state is facing a shortfall of an estimated $400 million in its
Medicaid program next year.

Matt DeCample, a spokesman for Gov. Mike Beebe, said it's too early to
say how the money will be distributed if the fines are upheld.

"While it's a very impressive award, we recognize that the appeals
process can be a lengthy one, so it is too early to speculate about the
use of that money," DeCample said in an email.

http://www.nzherald.co.nz/health/news/article.cfm?c_id=204&objectid=10798267

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