Texas Attorney General Sues Pharmaceutical Giant

Fourteen years after the State of Texas recovered $17.3 billion from tobacco manufacturers, Texas Attorney General Greg Abbott now returns to the courtroom this week against pharmaceutical giant, Janssen Pharmaceutical LLC in hopes to recover more than $1 billion in damages. Abbott is charging Johnson & Johnson Inc., its wholly owned subsidiary Janssen, and five other related companies for implementing a “sophisticated marketing scheme” to defraud the state into overpaying for Janssen’s schizophrenia drug, Risperdal. The state also alleges in its lawsuit that the pharmaceutical companies misled Texas health officials about Risperdal’s effectiveness, risk of side effects, and safety for pediatric use.

Risperdal was approved by the FDA in 1993 and quickly became one of Johnson & Johnson’s top-selling drugs; raking in more than $3.4 billion in annual sales. However, Abbott is alleging that much of this revenue is the product of suspect marketing tactics. Texas’ lawsuit claims that the named drug companies misrepresented “truthful information about the safety, efficacy, appropriate uses and cost-effectiveness of Risperdal” to state officials. The state further alleges that by setting their sights on the largest Medicaid population in the country – Texas, these drug companies have successfully exploited the lucrative public sector, since schizophrenic adults tend to be poor and uninsured.

However, according to the lawsuit, persuading Texas to label Risperdal as a preferred medication is no simple task. In fact, Johnson & Johnson even created their own special department to push the drug in the public sector. According to the allegations, the companies’ misrepresentations about the drug allowed them to circumvent the Texas Medicaid Program’s cost-saving measures. The state also alleges that these pharmaceutical companies bribed “key decision-makers,” such as doctors employed by the state’s Health and Human Services Commission, more than a decade ago in order to give Risperdal preference over competing antipsychotic drugs.

This is not the first Risperdal-related lawsuit Johnson & Johnson and its subsidiaries have faced. In October 2010, Louisiana was awarded $258 million from the Risperdal manufacturer for violating the state’s Medicaid Fraud Act. In June 2011, South Carolina received the largest verdict in the country over the marketing of Risperdal after it issued the defendants to pay $327 million for misrepresenting the possible side effects of Risperdal.

Trial began this Tuesday as Texas Attorney General Greg Abbott seeks over $1 billion in damages – a verdict that, if successful, would dwarf that which was recently seen in South Carolina.