Arkansas judge fines J&J $1.1B in Risperdal case

LITTLE ROCK, Arkansas�An Arkansas judge on Wednesday fined Johnson & Johnson and a subsidiary more than $1.1 billion after a jury found that the companies downplayed and hid risks associated with taking the antipsychotic drug Risperdal.

Judge Tim Fox determined that Johnson & Johnson and its subsidiary, Janssen Pharmaceuticals Inc., committed nearly 240,000 violations of the state's Medicaid fraud law � or one for each Risperdal prescription issued to state Medicaid patients over a 3�-year period. Each violation carried a $5,000 fine, the state's mandatory minimum amount, bringing the total to more than $1.1 billion.

Fox issued an additional $11 million fine for more than 4,500 violations under the state's deceptive practices act, but he rejected the state's request to levy fines in excess of the $5,000 minimum for the Medicaid violations.

Attorneys for the state declined to immediately comment about the huge award after the hearing.

Janssen issued a statement in which it said, "We are disappointed with the judge's decision on penalties. If our motion for a new trial is denied, we will appeal."

Janssen attorney Ed Posner argued during Wednesday's penalty hearing that there was no evidence that harm had been done and that the penalties were inappropriate.

Arkansas was one of several states to sue over Risperdol. A South Caroline judge upheld a $327 million civil penalty against the J&J and Janssen in December. Meanwhile, Texas reached a $158 million settlement with the companies in January in which the company didn't admit fault.

Shares of New Brunswick, New Jersey-based J&J were trading after the ruling at $64.04, down 16 cents per share.

Jurors in Arkansas were not told about the financial stakes during 10 days of testimony, 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. If upheld, the award would go toward the state's Medicaid fund, which is facing a projected $400 million deficit next year.

Risperdal, introduced in 1994, is a "second-generation" antipsychotic drug that earned Johnson & Johnson billions of dollars in sales before generic versions became available several 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 deliberated for three hours Tuesday before deciding in favor of the state.

Arkansas Attorney General Dustin McDaniel said Tuesday he pursued the case to protect consumers from "fraud and deceptive trade practices."

Janssen continued to maintain after the verdict that it did not break the law, pointing out that the package insert included with the medication was approved by the U.S. Food and Drug Administration.