Judge orders Johnson & Johnson subsidiary to pay SC $327 million for deceptive drug marketing


COLUMBIA, S.C. — A Johnson & Johnson subsidiary must pay South Carolina $327 million for deceptive marketing of an antipsychotic drug, a Spartanburg County judge ruled Friday.

State officials said the amount was the largest drug marketing award to date in South Carolina history and the largest penalty levied for violations of the South Carolina Unfair Trade Practices Act. A spokeswoman for Janssen Pharmaceutica Inc. — a subsidiary of the New Brunswick, N.J.-based drug manufacturer — said the company was disappointed and would appeal.

In March, a jury said Janssen broke the law by sending misleading letters to about 7,200 doctors in South Carolina downplaying the links between diabetes and its schizophrenia drug Risperdal and improperly claiming the drug was safer than competing medications.

The blockbuster antipsychotic lost patent protection in 2008. Johnson & Johnson said earlier this year that Risperdal Consta, the long-acting version of the drug, generated $1.5 billion in sales last year.

South Carolina Unfair Trade Practices Act violations carry potential penalties of up to $5,000 apiece, meaning the company had faced possible consequences of more than $3.1 billion, considering the 620,000 Risperdal prescriptions written for people on Medicaid and the state health plan alone.

Opting not to consider the number of prescriptions in his equation, Circuit Court Judge Roger Couch assessed a $300 penalty per sample box of the drug that was distributed and a $4,000 penalty per publication of the "Dear Doctor" letter, for a total penalty of more than $327 million.

"There is absolutely no doubt in my mind that the desire to protect market share overshadowed the good judgment of those in control at Janssen," Couch wrote.

Saying that the drug manufacturer acted in good faith, attorneys for Johnson & Johnson argued it sent the "Dear Doctor" letter without being asked to do so by the U.S. Food and Drug Administration and that drug regulators never expressed any concern over the package insert.

The company also made tens of thousands of drug marketing-related visits that minimized Risperdal's link to diabetes, improperly claimed the drug was safer than other competing medications and enclosed misleading information inside drug packages, a jury found. In his order, Couch wrote that Janssen knew that Risperdal was associated with health problems but intentionally hid those studies.

"The Company systematically set about in a concerted effort to conceal that information and to manipulate the information available to the public for the purpose of protecting or improving its market share," Couch wrote.

Spokeswoman Kara Russell said the Titusville, N.J.-based Janssen stands behind its product and the ways in which it was marketed.

"Among other concerns, we don't believe that the dissemination of an FDA approved package insert constitutes a violation of the South Carolina Trade Practices Act," Russell said.

Mark Plowden, a spokesman for state Attorney General Alan Wilson, said the case marked the largest penalty for breaking the South Carolina Unfair Trade Practices Act and also represented the state's largest award in a drug marketing case.

Last year, South Carolina struck a deal with Pfizer Inc. for $11 million over the company's disputed sales tactics for certain drugs, double the amount the state said it would have gotten under a multistate deal. In 2009, the state reached a $45 million settlement with drug maker Eli Lilly & Co. over the company's marketing of an anti-psychotic drug, an agreement the drug maker said was its largest with a single state over Zyprexa.

South Carolina's case over Risperdal is the fourth to go to court nationally. A Pennsylvania case was dismissed in June, and a case in West Virginia was dropped in December. Janssen has appealed a Louisiana verdict ordering the company to pay nearly $258 million for misrepresenting Risperdal's links to diabetes.

In May, Johnson & Johnson mentioned in a quarterly financial filing it had set aside a reserve related to a federal criminal investigation of its sales and marketing practices for Risperdal.


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