J&J to Pay $1.1 Billion Penalty over Risperdal in Arkansas
Pharmaceutical giant Johnson & Johnson must pay $1.1 billion penalty over shady marketing of its antipsychotic drug Risperdal.
Arkansas sued the company, saying it had deceived doctors in the state by marketing its drug as better than its rival therapies and selling it for unapproved uses in children.
Arkansas State Judge Tim Fox found that the company committed more than 238,000 violations of the state’s Medicaid fraud laws over almost four year period. Each violation carries a fine of $5000, has made a bulk of the penalty.
The fine was imposed following a two week trial in Pulsaki County Circuit in Little Rock.
“We are disappointed with the judge’s decision on penalties”, said J&J spokeswoman Teresa Mueller, who confirmed the award. She said to Reuters that J&J would appeal the award if the company’s motion for a new trial is denied.
According to published reports, cases against J&J’s marketing of Risperdal have been going on in at least seven other states. These states are claiming reimbursement for Medicaid or other public funds that were used to pay for this drug.
Louisiana has ordered the manufacturer to pay $258 million as a penalty for making misleading claims about the drug. In 2011, South Carolina judge ordered J&J to pay $327 million for deceptive marketing. Recently, the company ended a trial in Texas with a settlement of $158 million in January.
The U.S Department of Justice has been investigating allegations that the company marketed Risperdal for unapproved uses.
In the Arkansas case, the state’s lawyers argued that the company had not put warnings about the drug’s diabetes risks and other side effects on the label.
In 2003, thousands of doctors were sent “Dear Doctor” marketing letters by the company selling its drug. The state lawyers are now seeking fines over misleading statements present in these letters.
Arkansas Attorney General Dustin Mc Daniel called the more than $1.1 dollar in penalties “a big win for Arkansas”.
According to reports, J&J shares were off 18 cents at $63.95 at 2.50 pm in NYSE. The shares have fallen 2.5% this year.
The sales of drug fell to $527 million in 2010 from a staggering $4.5 billion dollars in 2007. This was partly due to the fact that company lost patent protection allowing other players market their medicines.
Risperdone (Risperdal) is an antipsychotic medication used to treat mental illness including schizophrenia, bipolar disorder, and irritability associated with autistic disorder.