South Carolina delivers serious blow to Johnson & Johnson over Risperdal

In what is the largest verdict thus far brought against Johnson & Johnson subsidiary Ortho-McNeil-Janssen Pharmaceuticals over reportedly deceptive Risperdal marketing claims, a South Carolina judge ordered the company to pay more than $327 million in penalties

Jeffrey Bouley
SPARTANBURG, S.C.—In what is the largest verdict thus far brought against Johnson & Johnson subsidiary Ortho-McNeil-Janssen Pharmaceuticals over reportedly deceptive Risperdal marketing claims, a South Carolina judge ordered the company to pay more than $327 million in penalties. But that might just be the tip of the iceberg, with some market watchers and legal experts projecting that J&J might ultimately have to pay out $1 billion over marketing claims that the antipsychotic drug was safer and better than competing medicines.

The verdict amount is based upon violations found with Risperdal  drug labels and "dear doctor" letters. Regarding the drug label violations, Circuit Court Judge Roger Couch ruled that more than 500,000 package inserts were distributed with sample boxes, and levied $300 per violation for total drug label damages of $152.8 million. Regarding the "dear doctor" letter violations, the judge ruled that just under 7,200 letters were mailed and a little more than 36,000 were provided during sales calls, and levied $4,000 per violation for total awarded damages on that front of $174.2 million. This amounts to the highest verdict brought against Janssen for the drug Risperdal, according to the law firms Harrison, White, Smith & Coggins, P.C. of Spartanburg, the Simmons Law Firm of Columbia and Texas-based firm Bailey Perrin Bailey.

"The verdict handed down by the jury is just and speaks the truth," says John B. White, Jr. one of the attorneys representing the state in the case. "The damages awarded further substantiate the level of deception Janssen used in business practices in our state."

The state maintains that J&J's Ortho-McNeil-Janssen Pharmaceuticals unit repeatedly violated the state's consumer protection laws by sending a 2003 letter to doctors touting Risperdal as superior to rival drugs and including deceptive information in the product's warning label.

The pharma company's executives allowed a "profit-at-all-costs mentality" to cloud their judgment in connection with the drug's marketing campaign and its labeling, Couch wrote in his 17-page ruling.

Janssen officials, however, disagree and said after the ruling that the company will appeal Couch's order, asserting that they fully disclosed Risperdal's health risks and properly marketed the antipsychotic drug.

"We don't believe that the dissemination of an FDA-approved package insert constitutes a violation of the South Carolina Trade Practices Act," Kara Russell, a spokeswoman for Janssen told Bloomberg in an e-mailed statement. "We do not believe the ruling can be upheld on appeal."

But the more than 7,000 letters in South Carolina are just a small part of the picture, as the drug safety claims that J&J and Janssen made in November 2003 correspondence—and which form the core of complaints against them—were sent to approximately 700,000 physicians throughout the United States. In fact, some market watchers and legal experts project that J&J might ultimately have to pay out around $1 billion—whether in penalties from state cases or a settlement deal with federal prosecutors—over the marketing claims that the antipsychotic drug was safer and better than competing medicines

The South Carolina case is one of 10 state lawsuits over Risperdal marketing thus far, though J&J got a win against Pennsylvania officials, who charged J&J hid the risk of diabetes and misled state regulators into paying millions more than they should have for the medicine, when the case was dismissed. Some two years ago, a West Virginia judge awarded $3.95 million in damages, saying J&J misled physicians about the risks and benefits of the drug, but ultimately dropped its claim after J&J won an appeal. On the other hand, October saw a Louisiana jury order J&J to pay $257.7 million in damages for making misleading safety claims, with another $73 million in legal fees tacked on thereafter—and that hasn't been overturned as yet.

As early as 1994, the FDA had ordered J&J's Janssen Pharmaceuticals unit to cease making false and misleading marketing claims about Risperdal's superiority to drugs with which it competed, and in 1999 the FDA warned J&J in a letter that its marketing materials for geriatric patients overstated Risperdal's benefits and minimized its risks, in addition to accusing them of implying that Risperdal had been found effective for illnesses such as bipolar disorder and elderly psychosis.


Jeffrey Bouley

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