Johnson & Johnson has Agreed to Pay $158M in Texas Off-Label Marketing Case

Pharmaceutical giant Johnson & Johnson has agreed to a settlement that will have the New Jersery based drug manufacturer paying out $158 million to the state of Texas. Texas officials claim that J&J defrauded the state’s Medicaid program by promoting the drug Risperdal for uses not approved by the FDA, including the treatment of psychiatric disorders in children. The state also alleges that J&J downplayed the risks associated with Risperdal. see the Bloomberg article here.

The settlement terms state that Janssen, a subsidiary of J&J, will pay $158 million to the state of Texas for the full resolution of all claims in Texas. The settlement is about 27% of the 579 million Texas attorney general Greg Abbott was seeking to recover. The settlement comes four weeks into a trial of the state’s lawsuit and less than a month after the company agreed to over $1 billion to the U.S. and a number of states to end a civil investigation into Risperdal marketing practices.

The settlement marks the first time that J&J and Janssen have agreed to resolve a state’s claims over Risperdal, says company spokesperson Teresa Mueller.

Attorneys for the state sought to prove that despite the fact that the drug had not been approved for use in children, and the drug’s label clearly stating that “safety and effectiveness in children have not been established,” the company deliberately marketed Risperdal for use in children.

A former Janssen sales manager testified, that in an effort to compete with Astrazeneca’s Seroquel and Eli Lilly’s Zyprexa, Janssen pushed its sales people to “flood clinics with Risperdal stuff” in a 2004 campaign.

One state expert, psychiatrist and Harvard Medical School instructor, Joseph Glenmullen, testified that J&J hid three potentially damaging studies and that as early as 1999 Janssen researchers’ findings indicated that about half of the patients taking Risperdal developed diabetes after one year on the medication.

“Today’s agreement sends a strong message that the state will pursue those who defraud Texas taxpayers,” Greg Abbott, Texas attorney general, said in a statement. “Johnson & Johnson’s scheme to profit from the Medicaid program by overstating the safety and effectiveness of an expensive drug and improperly influencing officials ended up costing taxpayers millions of dollars.

J&J and Janssen are also currently in the middle of a trial in Minnesota, as part of a multi-district litigation over the company’s antibiotic medication Levaquin. The trial focuses on the allegations that J&J and Janssen failed to provide adequate safety warnings about the risks associated with the use of the Levaquin, namely the drastically increased risk of tendon damage and tendon ruptures associated with the drug. Texas attorneys Robert Binstock and Jim Morris along with others, are currently involved in conducting the trial which began on January 3^rd. The trial is the fourth in a series of Levaquin bellwether trials that will set the tone for how the thousands of pending lawsuits will be handled.