SC high court further reduces penalty in drug marketing case

AP News
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Posted: Jul 08, 2015 12:11 PM

COLUMBIA, S.C. (AP) — South Carolina's highest court on Wednesday further reduced the penalty against a Johnson & Johnson subsidiary accused of deceptive marketing of an anti-psychotic drug.

In its ruling, the state Supreme Court ordered Janssen Pharmaceutica, Inc., to pay about $124 million — more than $200 million less than the original penalty amount.

In 2011, a trial court ordered the drug maker to pay $327 million, saying Janssen broke the law by downplaying to doctors the links between diabetes and Risperdal and by improperly claiming the drug was safer than competing medications, like Eli Lilly & Co.'s Zyprexa.

Circuit Judge Roger Couch assessed a $300 penalty per sample box of the drug that was distributed. He also assessed a $4,000 penalty per publication of the "Dear Doctor" letter, writing that Janssen knew Risperdal was associated with health problems but intentionally hid studies to that effect, instead telling doctors their drug led to lower incidence of diabetes and weight gain than a competing medicine.

That total penalty was the largest drug marketing award in state history and the largest penalty levied for violations of the South Carolina Unfair Trade Practices Act.

Company attorneys argued the award should be overturned, saying Janssen meant no harm and hurt no one. In February, the high court more than halved the penalties, saying Janssen should only pay South Carolina $136 million because of South Carolina's three-year statute of limitations on such cases.

In Wednesday's opinion, justices reduced civil penalties on the labeling claim by $12 million, saying that a recalculation of its original assessment was necessary.

Risperdal was introduced in 1994 as a "second-generation" anti-psychotic drug, and it earned Johnson & Johnson billions of dollars in sales before generic versions became available. The drug is used to treat schizophrenia, bipolar disorder and irritability in autism patients.

During a 2013 hearing, attorneys for the drug company argued before the South Carolina Supreme Court that the award should be overturned, saying Janssen didn't mean any harm and hurt no one.

Risperdal has been the subject of litigation throughout the country. In 2013, Janssen announced a $181 million settlement with 36 states and the District of Columbia. Janssen admitted no wrongdoing, and South Carolina was not part of that deal.

Last year, the Arkansas Supreme Court declined to reconsider its decision that threw out a $1.2 billion judgment against the company over allegations it violated the state's unfair trade practices act in improperly marketing Risperdal. A year ago, the Louisiana Supreme Court overturned a $330 million verdict against Janssen.

Janssen agreed to pay $5.9 million to settle a lawsuit with Montana. Two similar cases in Pennsylvania and West Virginia were eventually dismissed.

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Kinnard can be reached at http://www.twitter.com/MegKinnardAP