Arkansas court boots $1.2B J&J verdict on technical grounds

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In defending the largest state-level decision ever won against Johnson & Johnson ($JNJ) for its Risperdal marketing, the state of Arkansas said the New Jersey-based company didn't properly communicate the antipsychotic's risks and marketed it for off-label use. In its appeal, J&J said it didn't commit fraud or harm the state's Medicaid program. But Arkansas' Supreme Court had something entirely different to say when it overturned the $1.2 billion judgment Thursday.

As the Associated Press reports, the court in Little Rock ruled that Arkansas improperly sued J&J and its Janssen subsidiary under a law that applies to healthcare facilities rather than pharma companies. And with that, a ruling by Pulaski County Circuit Judge Tim Fox from 2012--supported by attorneys general in 35 other states--was no more.

"I am disappointed that the Court viewed the law differently," Arkansas Attorney General Dustin McDaniel said in a statement seen by the AP. "Nevertheless, I will keep working to protect consumers against fraud and the kinds of irresponsible and greedy actions shown by Johnson & Johnson and Janssen Pharmaceuticals in their marketing of the drug Risperdal."

The toss-out ends a 7-year legal battle that began when McDaniel sued J&J and its Janssen unit back in 2007, alleging that they downplayed and concealed Risperdal's risks and lied to doctors about its side effects. It's just one of several similar lawsuits; in November of last year, J&J agreed to fork over more than $2.2 billion to wrap up criminal and civil allegations in the third-largest settlement ever between a drugmaker and the U.S. Department of Justice.

At the state level, J&J has had some success convincing high-court judges to nix Risperdal-related verdicts. In January, the Louisiana Supreme Court nixed a $257 million award, ruling that the state didn't prove J&J's marketing violated a state law that resembles the federal False Claims Act. J&J now has one more high court to persuade for the hat trick: In South Carolina's Supreme Court, it has an appeal pending of a $327 million judgment in a similar case.

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