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J&J's high-stakes argument against $1.2B Risperdal fine begins in Arkansas' top court

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It's Johnson & Johnson's ($JNJ) last stand in Arkansas. The drugmaker has its chance Thursday to persuade the Arkansas Supreme Court to toss out the $1.2 billion judgment awarded in a court fight over Risperdal marketing.

An Arkansas jury delivered the original decision in 2012, finding that J&J and its Janssen Pharmaceuticals unit soft-pedaled the risks of Risperdal, an antipsychotic drug, and misled doctors about its benefits. A judge fined the company a total of $1.2 billion. At the time it was the largest penalty against J&J in the Risperdal marketing case.

Since then, the company agreed to pay $2.2 billion to settle marketing infractions, including allegations that it pushed Risperdal for unapproved uses and misrepresented its risks and benefits. The Arkansas verdict still dwarfs every state-level decision in a Risperdal case.

In appealing the Arkansas decision, J&J cited laws against excessive fines, and it's apparently planning to use a free-speech argument before the state's top court. Arkansas Attorney General Dustin McDaniel has pooh-poohed that argument. The AGs of 35 other states have thrown their weight behind the verdict, by filing a brief urging the court to uphold the verdict. Other friend-of-the-court briefs include those filed by AARP and former FDA Commissioner Donald Kennedy.

J&J has had some success at persuading high-court judges to reconsider Risperdal-related verdicts. Last month, the Louisiana Supreme Court deep-sixed a $257 million award for deceptive marketing, saying that the state didn't prove the company's marketing violated a state law similar to the federal False Claims Act. Even if J&J misrepresented a product's safety or efficacy, that itself wouldn't be enough to breach the rules, the court decided.

McDaniel's own brief defending the $1.2 billion penalty called the amount "consistent with Arkansas law," not to mention the proper penalty given J&J's "serial violations of state law." His fellow state AGs are supporting the fine because they consider the case significant to their own business of deterring "fraudulent, harmful behavior," McDaniel said when their supporting brief was filed.

Free-speech protections for off-label marketing have been a hot topic, in light of a U.S. Supreme Court ruling that sided with a pharma rep on the issue. Drugmakers have made the same argument in lawsuits. Par Pharmaceutical, for instance, sued the FDA, claiming it should be allowed to promote its drug Megace for unapproved uses on free-speech grounds. The company last year settled off-label allegations with the Department of Justice for for $45 million.

Special Report: Pharma's Top 11 Marketing Settlements - J&J | 10 Largest Settlements and Judgments

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