Two years ago, healthcare giant Johnson & Johnson was facing a $1.2 billion judgment after a jury determined J&J concealed the risks of its antipsychotic drug Risperdal while it aggressively and improperly marketed it off-label. At the time it was the largest state fine over the mismarketing of Risperdal and having taxpayers pick up the tab.

This week the Arkansas Supreme Court  (Ortho-McNeil-Janssen Pharmaceuticals Inc et al v. Arkansas, Arkansas Supreme Court, Nos. 12-1058, 13-468) reversed that jury decision indicating that the wrong law had been used to sue Johnson & Johnson. The company’s Janssen Pharmaceuticals unit, violated Arkansas Medicaid fraud laws, according to the jury decision, but the high court said Janssen is not a healthcare facility and the statute applies to deceptive trade practices by facilities, not drug companies.

J&J is also off the hook for $181 million in attorney’s fees. Reuters quotes the Arkansas Attorney General in saying he believes Medicaid fraud laws do apply to companies, not just healthcare facilities.

When Risperdal was approved in 1994 it was prescribed to treat bipolar disorder, schizophrenia and irritability in autistic individuals. But soon the company was marketing Risperdal off-label to nursing homes to quiet those suffering from dementia even though it was linked to stroke, weight gain and diabetes. Mentally ill youngsters and the disabled were also the target of sales representatives pushing Risperdal to quiet their behavior, despite the risks. The Food and Drug Administration never approved Risperdal for those uses.

South Carolina’s Supreme Court is considering a similar ruling after it imposed a $327 million fine. Last January, Louisiana’s Supreme Court overturned a $258 million fine awarded for improper Risperdal marketing.

J&J has not been able to relieve itself of a $2.2 billion fine imposed by the federal government and various states to settle civil and criminal charges it pushed Risperdal, as well as other drugs, for unapproved uses.

Risperdal generated sales of $4.5 billion at the peak of its popularity in 2007. Since then Risperdal has lost its patent and sales have been declining ever since. In 2011, sales fell to $542 million, reports

If you do the math you see that J&J and its Janssen division are still ahead of the curve, even if and when it pays out those fines.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Searcy Denney Scarola Barnhart & Shipley | Attorney Advertising

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