UPDATED: Judge hits J&J with $1.1B penalty in Risperdal case

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Johnson & Johnson ($JNJ) has suffered another Risperdal defeat. And this one is several times larger than the others: An Arkansas judge slapped the drugmaker with $1.1 billion in penalties for deceptively marketing the antipsychotic drug in his state.

The judge's ruling comes after a jury verdict yesterday against the company and its Janssen unit. Like other juries before it, the Arkansas panel found that the company soft-pedaled Risperdal's risks. Once again, it's a marketing letter dispatched to doctors that apparently clinched the deal.

After deliberating about three hours, the jury decided that J&J and Janssen broke deceptive trade practice laws with a "Dear Doctor" letter touting Risperdal as safer than its rivals. Using a phrase that he has repeated several times as this case has progressed, Arkansas Attorney General Dustin McDaniel said the jurors agreed that J&J "lied to patients and doctors because they cared more about profits than people."

In a similar case in South Carolina, where a letter to doctors also was deemed deceptive, a judge penalized J&J thousands of dollars for each copy sent, for a total of $327 million. The Arkansas AG had asked for at least $1.25 billion.

As Bloomberg notes, this is the third jury verdict against J&J, in lawsuits claiming that state Medicaid programs were duped into overspending on the drug. Besides the South Carolina case, a Louisiana suit ended in $258 million in penalties. J&J has appealed both of those rulings.

So, what's next for J&J, which faces other state claims, not to mention a combination federal-and-state settlement of Risperdal probes? "Three losses in a row means the company needs to become more realistic about its exposure and come up with an exit strategy in the form of a settlement," Carl Tobias, a product-liability law professor, told Bloomberg.

But J&J could well appeal this third verdict, too. After the ruling, J&J advanced an argument that sounds like a warm-up for a pre-emption claim--that the FDA, as a federal agency, supersedes state law. "It is our position that an individual state should not penalize a pharmaceutical company for using an FDA-approved package insert or decide for itself whether a company complies with FDA rules," a spokeswoman told Bloomberg.

- read the Bloomberg story

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