J&J nears $7.5M deal in Risperdal case that could have cost $1.2B

It took three years of legal wrangling by Johnson & Johnson ($JNJ), but for this kind of reprieve, it was time well spent. The company agreed to pay $7.5 million to wrap up a notorious Arkansas state lawsuit over Risperdal--a tiny fraction of the original $1.2 billion trial verdict.

As the Arkansas Democrat-Gazette reports, the $7.5 million settlement awaits approval from Pulaski County Judge Tim Fox, who presided over the original case, but Fox has already blessed the $2 million in legal fees that make up part of the deal. He ordered the two parties into mediation earlier this month, the newspaper says.

Thus the big bang of that $1.2 billion judgment ends in a whimper of a payment. The Arkansas verdict was colossal compared with other state-court decisions in Risperdal marketing cases, which alleged that J&J misled doctors and patients about the antipsychotic drug's benefits and risks. The next-highest judgment was $327 million, in South Carolina, and that verdict has since been cut to $136 million on appeal to the state's top court. J&J agreed to pay the state of Texas $158 million in a similar case.

The difference in Arkansas was this: The state's Supreme Court tossed out that $1.2 billion judgment, saying the suit was filed under a law that doesn't apply to pharma companies, but healthcare facilities.

That was in March 2014. Now, the end of the argument is in sight, the Democrat-Gazette says, citing court documents. The Arkansas Attorney General's office and J&J both say the details aren't fully decided, but the state's portion of the settlement was outlined in Fox's approval of legal fees.

"The full details of the settlement have not been finalized, and the parties are still working," AG office spokesman Judd Deere told the Arkansas newspaper.

When it's final, the settlement won't include any admission of liability, "which Janssen expressly denies," a company spokeswoman said, adding that "the settlement, which resolves all claims filed by the Arkansas Attorney General, is a compromise reached in the interest of ending the litigation."

It's been a long road in court with Risperdal, as J&J fought state court suits over its marketing and plaintiffs' claims about the drug's side effects. The company also agreed to pay $2.2 billion to settle marketing allegations with the U.S. Justice Department and a number of states that didn't pursue individual suits against the company.

And the litigation isn't over yet. The company now faces more than 1,000 lawsuits over Risperdal's ability to trigger breast development in boys. J&J lost the first court battle in February, as a Philadelphia jury decided that the company failed to warn about that particular risk. The jury ordered J&J to pay almost $2.5 million to the young man who developed breasts while using Risperdal.

- read the Democrat-Gazette coverage

Special Reports: Top 15 pharma companies by 2014 revenue - J&J | Pharma's Top 11 Marketing Settlements

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