Arkansas Seeks $1.2 Billion Fine For Johnson & Johnson Hiding Drug Risks

Feb 27, 2014

The Arkansas Supreme Court is considering an appeal by Johnson & Johnson over a $1.2 billion dollar award imposed by a Pulaski County jury in 2012.

Justices heard oral arguments Thursday with the state maintaining the company intentionally hid risks associated with the anti-psychotic drug Risperdal and in the process defrauded the state’s Medicaid program and deceptive trade practices act.

Former US Solicitor General and Johnson & Johnson’s representative Walter Dellinger disputed evidence of harm.

“There's not been a single instance where the Arkansas Medicaid program or the Attorney General's office has ever made a determination that a prescription for Risperdal written for, participated in, and paid for by the Arkansas Medicaid program was medically unnecessary. The ensuing admissions say none were not for a medically accepted indication, none were improperly reimbursed,” said Dellinger.

But Arkansas’s special council David Frederick argued there is sufficient evidence to show harm.

“Every one of the 238,000 prescriptions that were filled without truthful, accurate information about drug risks put a person's life at stake. They concede that if it were done once that would be fine, we'll pay that. It's only when they've done it 238,000 times that somehow that gives rise to a constitutional problem,” said Frederick.

Dillinger argued drug labeling information is a concern of the FDA, not the state of Arkansas.

“If there's a problem with the label the FDA is regulating that. If citizens are harmed then you can bring suits like the suit that was brought in Wyeth against Levine for compensation to the victim and there's no such claim or victim here,” said Dillinger.

Representatives of the state argued they are allowed to seek penalties over labels and products within the Arkansas Medicaid system and that harm to individuals is an intrinsic result of inaccurate warning labels – thus affecting everyone prescribed.

Frederick said Johnson & Johnson, the parent company of Janssen, deliberately hid side-effects of the anti-psychotic such as stroke and diabetes from patients and doctors as early as 1997. He said a light penalty is not sufficient to address "serial recidivism" and the costs of side-effects on Arkansas's health care system.

“Janssen was projecting making $33 billion on Risperdal sales. It was the number one drug in the company. It accounted for 50 percent of their revenue. They knew that if they told the truth on their drug label they would lose hundred of millions of dollars in sales,” said Frederick.

Arkansas did not participate in a federal settlement of only $1.39 billion to be dispersed among 45 states. While a few states have also taken their own route, several settled for hundreds of millions of dollars less than Arkansas. This case is being watched by other attorneys general and may find them assessing agreeing to settlements with pharmaceutical companies differently.

A judgment is expected within a few weeks.