J&J Unit Marketed Risperdal Off-Label, Ex-Workers Say (Update2)

By Margaret Cronin Fisk and David Voreacos

March 6 (Bloomberg) -- Johnson & Johnson’s Janssen Pharmaceutica unit pushed sales representatives to promote its antipsychotic drug Risperdal for uses not approved by regulators, three former salespeople said in a lawsuit against the company.

J&J tried to promote Risperdal for conditions beyond schizophrenia, its approved use until December 2003, according to sworn statements among almost 1,000 pages of documents in the case in Trenton, New Jersey. To boost sales of the medicine, J&J urged doctors to prescribe Risperdal for conditions such as bipolar disorder and depression, the declarations say.

“We (sales representatives) were directed to grow share in these off-label populations,” ex-saleswoman Kristel Kellner said in a statement as part of the lawsuit filed by Lynn Powell, one of the former salespeople. Powell claims J&J fired her in 2004 for complaining about such practices, violating a law shielding workers from retaliation.

Risperdal was J&J’s fourth-biggest seller in 2008. It was its biggest in 2007, before a patent expired.

The declarations, which are exhibits in Powell’s suit against the company, contradict the company’s statement in a court filing that any so-called off-label promotion “was and is strictly prohibited by Janssen.”

The Justice Department is investigating such practices at Janssen and in the industry. Nine states including Louisiana have sued J&J, claiming it violated a federal bar to off-label marketing, according to company regulatory filings.

Ex-Colleague ‘Demoralized’

Powell’s firing “demoralized me and my peers because all of us were selling in the same manner,” a former salesman, Matthew Fontaine, said in a statement. A trial of the lawsuit, filed in February 2005, is set for March 30.

Janssen says it didn’t do off-label marketing and won’t comment on specific claims in the lawsuit for reasons of employee privacy, a company spokesman, Srikant Ramaswami, said in an e- mailed response to questions.

“Janssen has a system in place to ensure that our marketing and promotion policies are followed,” he said. “If questions are raised about adherence to these policies, we act quickly to investigate the situation and take appropriate disciplinary action.”

Risperdal generated $3.4 billion in sales in 2008, or 5.4 percent of sales for J&J, based in New Brunswick, New Jersey. Janssen is a division of J&J’s Ortho-McNeil-Janssen Pharmaceuticals unit.

Shares Prices

J&J rose 30 cents to $47.97 in New York Stock Exchange composite trading. The shares have fallen 23 percent in the past year.

Drugmakers have paid billions of dollars to resolve litigation and government investigations over marketing of medicines for conditions not approved by the U.S. Food and Drug Administration.

Pfizer Inc., the world’s largest drug company, said Jan. 26 it would pay $2.3 billion to end a marketing probe over the painkiller Bextra and other drugs. Eli Lilly & Co. said Jan. 15 it would pay $1.42 billion over promotion of its antipsychotic Zyprexa.

Risperdal’s competitors include Zyprexa and AstraZeneca Plc’s Seroquel.

For J&J, the impact of litigation depends on the extent of any off-label marketing, said Marc Davis, a fund manager at Summit, New Jersey-based Tradition Capital Management LLC.

Investor Comments

“It’s hard to tell how bad it will be for Johnson & Johnson because we don’t know” how widespread the off-label marketing practices were, Davis said today in a phone interview. “The more widespread is, the higher the penalties will be.

“Johnson & Johnson is well-diversified, so any penalty won’t hinder the company’s growth going forward.”

Davis’s fund holds about $7 million worth of the drugmaker’s stock.

“Off-label marketing is a sort of skinflint, cheap way of promoting drugs without doing the research needed to get the approval of the FDA for new uses,” said Sidney Wolfe, director of Public Citizen’s Health Research Group, a Washington-based advocacy organization. “Companies that do this place patients at risk because there is no assurance that the benefits outweigh the risks.”

While drugmakers aren’t allowed to urge off-label uses, doctors can prescribe medicines for conditions not approved by the FDA. Dr. Jeffrey Lieberman of Columbia University Medical Center said off-label prescribing “is done all the time in the practice of medicine in a very rational and useful way.

Pushing Boundaries

“Researchers are pushing the boundaries of trying to determine how a therapeutic agent can be effectively applied,” said Lieberman, the psychiatry department chairman. “The process of getting FDA approval is a lengthy, complicated and expensive one.”

Almost 1,000 pages of documents in the Powell case, available in Trenton, include salespeople’s descriptions of marketing pitches, articles provided to them on studies of new uses and details on the hiring of medical leaders to talk to other physicians about the drug’s benefits.

Powell’s lawyers argued in court papers that Janssen “observed, encouraged, documented and praised Lynn and her peers for following management’s direction to promote Risperdal off- label.”

J&J says it never promoted the drug for unapproved uses. The company promotes its products “only for their FDA-approved indications,” said Ramaswami, the spokesman.

J&J on Firing

Powell was fired because of repeated violations of company policy barring the practice, the company said in a Nov. 7 filing seeking dismissal of the case.

Powell argued otherwise. “Lynn’s career ended not because she broke a company rule against off-label promotion, but because she challenged sales direction that ignored that rule,” her lawyers said in a Dec. 5 filing.

State Superior Court Judge Thomas W. Sumners Jr. ruled Feb. 25 the case can go to trial under New Jersey’s Conscientious Employee Protection Act. He threw out a sex-discrimination claim. Powell is seeking unspecified money damages.

Powell claims the company promoted the drug for uses that were never approved by the FDA and for bipolar treatment before the agency accepted that use.

Janssen first won FDA approval of Risperdal in 1993. At the time Powell was selling the drug, it was approved for schizophrenia in adults.

FDA Approvals

The drug was approved for bipolar mania in adults in December 2003. After that, it was approved for short-term bipolar use for children over the age of 9, schizophrenia in adolescents, and certain symptoms of autism in children 5 and up.

“We plan to engage the clinicians with discussion of the latest bipolar, depression and anxiety” data, sales manager Jan- Maarten Vlasblom wrote in a February 2002 e-mail that is part of a report in the court file by Powell expert witness Stefan Kruszewski.

Kruszewski’s report includes an October 2002 note by Mathew Thompson, who worked as a sales representative in Detroit at the time and later became Powell’s manager. The note describes Thompson’s discussion of Risperdal with a doctor.

“My goal was to expand his usage and try to get him to think more about the anxiety/depression and sleep and use it in combination with” another drug, Thompson wrote.

Powell was a sales representative in Raleigh, North Carolina, from 2000 until February 2004. She sold from $1.5 million to $2 million worth of Risperdal in 2003, according to pretrial testimony of Michael Walsman, the drug’s former national sales director.

Sales Calls

Like her colleagues, she documented her sales calls on doctors and hospitals in computer notes and helped set up promotional speaker programs by physicians, court records show.

In 2003, she wrote an “action plan” outlining her goals, according to court records. She said she would ask one doctor to try Risperdal for depression symptoms and another to add it for a bipolar patient taking Zyprexa. She said she would push doctors’ assistants to look at such symptoms and encourage physicians to add Risperdal to depression drug therapy.

Thompson praised Powell’s plan in an e-mail.

“Take a look at Lynn’s action plan,” he wrote to her colleagues. “She did an outstanding job of focusing on the ‘common’ things. This year, if we are going to succeed, we have to do the common things uncommonly well!”

Her relationship with the company soured after she communicated about off-label marketing with a doctor outside the company for whom she was arranging a talk with other physicians.

Powell’s Firing

The doctor forwarded an e-mail exchange with Powell to the company, which began investigating her call notes, according to J&J court filings. She was fired after the notes showed multiple violations of company policy, according to the filings.

Powell maintains she was fired after telling the doctor that Janssen’s speakers talked about off-label topics. After Thompson, her manager, said her job was in jeopardy, she told him, “I don’t understand what the problem is, this is exactly what you have been telling us what to do,” according to her pretrial deposition in September 2007.

Powell says she was pushed to encourage doctors to prescribe Risperdal for depression, anxiety and other unapproved uses and she was praised for expanding the market. The company gave bonuses for boosting Risperdal sales, according to a 2003 incentive compensation plan filed with her suit.

Each sales representative was eligible for a “Quarterly Risperdal Share Growth Kicker,” under the plan, according to the court filing.

Sales Bonuses

“Earn $2,000 per quarter if you grow Risperdal by .25 points,” it said. A sales person could “earn an additional $8,000 bonus in 2003 with this kicker alone!”

In the litigation, J&J has emphasized that sales representatives were warned in writing that they could be fired for off-label promotions.

“In no way did upper management ever tell us to be in accordance with this,” Powell said in her deposition. “They actually told us the opposite and stressed and pushed us to sell off label.”

Thompson sent his staff a Janssen “backgrounder” in preparation for a 2003 sales meeting that said Risperdal “continues to be a leader as its realm of use expands into mood and anxiety symptoms.”

Sixty percent of growth in the so-called atypical- antipsychotic market was “driven by the mood and anxiety segment, with primary care physicians (PCPs) accounting for one third of that growth,” according to the document in the court files.

Because of “a growing acceptance of using atypical antipsychotics to treat mood and anxiety disorders -- most frequently with bipolar disorder, major depression, post- traumatic stress disorder, and obsessive-compulsive disorder -- Risperdal is in a prime position to make a tremendous impact on this market,” it said.

The case is Powell v. Janssen Pharmaceutica Inc., L-358-05, Superior Court of New Jersey, Mercer County (Trenton).

To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.

Last Updated: March 6, 2009 16:46 EST