LITTLE ROCK — The state Supreme Court on Thursday overturned a $1.2 billion judgment against Johnson & Johnson in a lawsuit over the drug maker’s marketing of the antipsychotic drug Risperdal.
In a 4-3 decision, the high court reversed the judgment that was awarded to the state at the end of a 12-day trial in April 2012 in a lawsuit filed by Attorney General Dustin McDaniel in Pulaski County Circuit Court.
The lawsuit alleged that Johnson & Johnson and subsidiary Janssen Pharmaceuticals minimized the risks of Risperdal and marketed it for off-label use, in violation of the state Medical Fraud False Claims Act and the state Deceptive Trade Practices Act.
The drug maker was fined $5,000 each for 238,874 Risperdal prescriptions filled in the state between December 2002 and June 2006.
Johnson & Johnson argued on appeal that the Medical Fraud False Claims Act was incorrectly interpreted. The state Supreme Court agreed, saying Thursday that under the law, liability is triggered when a false statement is made regarding the conditions or operations of a health care facility when it is being certified or re-certified.
The drug maker "is indisputably not a health care facility and applying for certification or re-certification," Justice Karen Baker wrote in the court’s majority opinion, which dismissed the state’s claim under the Medical Fraud False Claims Act.
The court also agreed with Johnson & Johnson that the trial judge erred in allowing as evidence an April 19, 2004, warning letter issued by the U.S. Food and Drug Administration that said Janssen Pharmaceuticals had distributed a statement to health care providers about the effects of Risperdal that was false or misleading, in the opinion of FDA investigators.
"The ‘warning letter’ was part of a special investigation of a particular complaint, case or incident and falls directly within the parameters of the prohibited hearsay … and it is also more prejudicial than probative," Baker wrote in the majority opinion.
The state had used the letter to supports its claims under the Deceptive Trade Practices Act. The high court remanded those claims to Pulaski County Circuit Court for new proceedings.
Justice Paul Danielson wrote in a dissenting opinion that he agreed with the ruling on the Medicaid Fraud False Claims Act but did not believe the warning letter was admitted in error. Chief Justice Jim Hannah and Justice Donald Corbin joined in the dissent.
McDaniel said Thursday in a statement issued by his office, "We pursued this case based on the belief we continue to hold, which is that the General Assembly intended to give the attorney general’s office the authority to pursue penalties against those that would enter our state and blatantly deceive the public. I am disappointed that the court viewed the law differently."
Janssen Pharmaceuticals said in a statement Thursday, "We are pleased that the Arkansas Supreme Court has ruled in our favor, reversing and dismissing the state’s claims brought under the Medicaid Fraud False Claims Act, and has also reversed the Deceptive Trade Practices Act claim, remanding it to the court below. Janssen remains strongly committed to ethical business practices."