Arkansas Jury Finds Johnson and Johnson Subsidiary Defrauded State Medicaid Program

By April 13, 2012Jury Verdicts

As a dangerous drug lawyer, I wrote earlier this year about a trial in Texas over alleged defrauding of that state’s Medicaid program by the makers of the drug Risperdal. Risperdal (risperidone) is an atypical antipsychotic that is approved for use in patients with psychosis. However, it was frequently used “off-label” in elderly patients with dementia until a few years ago, when studies began to show that it actually increased the risk of death among those patients. Since then, prescriptions have dropped dramatically among the elderly, and state and federal medical programs have begun taking careful looks at just what the taxpayers have been paying for. Among the state Medicaid programs doing that review was the one in Arkansas, where the state brought Risperdal’s maker, Janssen Pharmaceuticals, to trial recently. Now, according to Bloomberg News, the trial has ended with a verdict of more than $1.1 billion.
The state of Arkansas alleged that Johnson and Johnson and Janssen misled doctors in the state about the risks and benefits of Risperdal, in part by sending them a letter that downplayed the drug’s side effects. The state also accused the pharmaceutical companies of falsely claiming Risperdal was safer and more effective than its competitors, and marketed it for unapproved uses even after an FDA warning told the company not to do that. After the jury found for the state, the trial judge assessed penalties for more than 238,000 violations of the state’s Medicaid fraud statute. Each violation carries a $5,000 penalty, putting the total fine at over $1.1 billion; the judge also assessed an $11 million fine for violations of the state’s law against deceptive trade practices. Janssen has already announced its intention to appeal if not given a new trial.
Arkansas is one of 11 states to sue over allegedly deceptive marketing of Risperdal; the federal government is also seeking a large settlement of a similar Risperdal lawsuit over deceptive marketing. The fine in Arkansas, however, is the largest in the three cases that have been resolved. Texas settled for $158 million in January; South Carolina won $327 million in court in December. Cases are on appeal in Louisiana and Pennsylvania as well. Makers of other atypical antipsychotics, which have many of the same problems as Risperdal, have also generally settled for less. Legal experts told Bloomberg that Johnson and Johnson appears to have lost a gamble that the juries would be sympathetic to them. A spokesperson for the Arkansas attorney general’s office said the bulk of the verdict would likely to go the state Medicaid program, which is suffering from deep cuts like nearly every state Medicaid program.
That last piece of information is significant to me as a defective drug attorney, and I suspect also significant to the juries who decide these cases. States are making ugly decisions right now, between balancing their budgets and providing adequate care to their poorest and most vulnerable citizens. A juror who knows this, particularly one with firsthand experience in Medicare, might not be terribly sympathetic after hearing accusations that Johnson and Johnson defrauded the state out of millions of dollars. Nor, in my opinion as a pharmaceutical liability attorney, should they be. Risperdal carries serious side effects including an elevated risk of stroke and heart attack, as well as long-term risks like diabetes and high blood pressure. With that much at stake, doctors and patients have the right to be well informed before they use the drug.


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