UPDATED: J&J said to settle TX Risperdal case for $158M

Johnson & Johnson ($JNJ) says it will pay $158 million to settle a high-profile Texas suit alleging that it defrauded the state by misleading doctors about its antipsychotic drug Risperdal. Bloomberg reports that the deal will wrap up the state's claims that J&J marketed Risperdal for unapproved uses and downplayed its risks. The state had sought at least $579 million in damages.

The settllement comes after more than a week of testimony, culminating yesterday with an expert witness who said the company hid data showing Risperdal could cause weight gain that triggered diabetes. The witness also alleged that J&J had key study results several years before it added warnings about weight gain to the drug's label, as Bloomberg reports.

Joseph Glenmullen, a Harvard Medical School psychiatrist, said a clinical trial known as Study 113 evaluated Risperdal against Eli Lilly's ($LLY) Zyprexa and found that about half of Risperdal patients developed diabetes after a year of therapy. Meanwhile, sales reps at J&J's Janssen unit were promoting Risperdal as superior to Zyprexa precisely because it did not cause diabetes, Glenmullen said.

When the FDA started looking at potential links between atypical antipsychotics and diabetes risk in 2000, J&J did not turn over Study 113 to the agency. Nor did it give the agency the results of two other studies that showed similar diabetes risks for both Risperdal and Zyprexa, Glenmullen said.

J&J has said it held onto Study 113 and the other research because the data was flawed, the witness testified, adding he considered Study 113 to be a high-quality trial and a "superb" example of scientific research. As Bloomberg points out, the unpublished studies were cited in a South Carolina case that ended in a $327 million judgment against the company. "It is apparent to this court that this information was not disclosed because if did not fit the marketing department's vision for the promotion and marketing of this drug," Judge Roger Couch wrote in a ruling (as quoted by Bloomberg).

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