LITTLE ROCK, Ark. -- A Johnson & Johnson subsidiary downplayed and hid risks associated with the antipsychotic drug Risperdal, a jury determined Tuesday in Arkansas' billion-dollar lawsuit against Janssen Pharmaceuticals Inc.
Arkansas Attorney General Dustin McDaniel's office is seeking fines of at least $1.2 billion for the 250,000 Risperdal prescriptions the state's Medicaid program paid for over 3 1/2 years. The penalty will be decided in a separate hearing Wednesday before Circuit Judge Tim Fox, who presided over the trial.
Risperdal, introduced in 1994, is a "second-generation" antipsychotic drug that earned Johnson & Johnson billions of dollars in sales before generic versions became available years ago. It is used to treat schizophrenia, bipolar disorder and irritability in autism patients. Risperdal and similar antipsychotic drugs have been linked to increased risk of strokes and death in elderly dementia patients, seizures, weight gain and diabetes.
The 12-person jury returned its verdict after about three hours of deliberations. Jurors, who heard 10 days of testimony, weren't told about the financial stakes, beyond that Janssen could have seen a $200 million swing in its revenues if it issued alarming warnings that the drug could cause weight gain, diabetes and other health effects. The award would go toward the state's Medicaid fund.
Janssen and Johnson & Johnson face dozens of similar lawsuits in federal court and in other states.
McDaniel said he pursued the case to protect consumers from "fraud and deceptive trade practices."
"Today, an Arkansas jury confirmed that Johnson & Johnson and Janssen Pharmaceuticals lied to patients and doctors because they cared more about profits than people," McDaniel said in a news release after the verdict was announced.
Jansen maintained that it did not break the law, pointing out that the package insert included with the medication was approved the U.S. Food and Drug Administration. The company can appeal to the Arkansas Supreme Court, though it didn't immediately indicate whether it would do so.
"Janssen firmly believes it did not violate the Arkansas Medicaid Fraud False Claims Act or the Arkansas consumer fraud statute. ... It is our position that an individual state should not penalize a pharmaceutical company for using an FDA-approved package insert or decide for itself whether a company complies with FDA rules," the company said in a statement Tuesday.
In closing arguments, attorney Fletch Trammell, a Houston lawyer hired by McDaniel's office to handle the suit, told jurors that Janssen lied to doctors, saying the drug didn't cause weight gain, diabetes and other adverse health effects.
"The law is broken once they tell a lie," Trammell said.
He explained that the FDA ordered Janssen to issue a letter to doctors correcting an earlier letter saying the drug didn't increase the risk of developing diabetes.
Janssen attorney James Simpson argued that neither McDaniel's office nor the state Medicaid office issued any warning to doctors that Risperdal carried greater risks than believed. He also noted that even after the lawsuit was filed, the state continued to pay for Risperdal prescriptions.
"That doesn't make any sense," Simpson said. "They never restricted a single ... Risperdal prescription."
Simpson also questioned why the state didn't have any testimony from doctors complaining about how the company disclosed the drug's side effects.
Trammell said any action the state did or did not take regarding Risperdal wasn't a concern for the jury. He said it is up to drug companies to notify doctors of any problems with a medication and that companies are obligated to act before the FDA gets involved.
"You have to ring the bell. You have to tell the public," Trammell said.
He cited instances in which patients gained 60 or 100 pounds, leading to diabetes.
Trammell said the rural nature of Arkansas makes it more important for drug companies to keep doctors informed. People outside of cities often rely on primary care doctors rather than specialists, he said, and non-specialists in mental health were prescribing the drug without knowing the full range of side effects.
Other states that have sued over Risperdal include Texas, which reached a $158 million settlement with Janssen in January but did not admit fault. Texas had sought damages of about $1 billion. In December, a South Carolina judge upheld a $327 million civil penalty against Johnson & Johnson.
Jurors in Arkansas had a set of 10 questions to decide – five regarding Janssen and five for its Johnson & Johnson parent company. The jury ruled in favor of the state on all 10 questions. Only nine votes were needed to reach a decision on any question. Several of the decisions were split 11-1 or 10-2.
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By CHUCK BARTELS 04/10/12 07:05 PM ET