1 Boring Old Man

Arkansas AG asks state Supreme Court to reconsider its tossing of $1.2B Johnson & Johnson fine

The Associated Press

By Andrew Demillo

April 7, 2014

Arkansas Attorney General Dustin McDaniel asked the state Supreme Court on Monday to reconsider its decision tossing out a $1.2 billion judgment against drugmaker Johnson & Johnson, saying justices did "significant harm" to the state and broke from 170 years of precedent. McDaniel filed a petition for rehearing over the high court’s decision last month that the state misapplied the Medicaid fraud law in its lawsuit against New Jersey-based Johnson & Johnson and its subsidiary Janssen Pharmaceutical Inc. over the marketing of the antispyschotic drug Risperdal. McDaniel said last week that he would ask the court to revisit the ruling. "The court’s rejection of the state [Medicaid fraud] case does significant harm to the state and its citizens," McDaniel wrote in the filing. "It deprives the state of a critical tool to protect the integrity of the Arkansas Medicaid program and the vulnerable poor, sick and elderly who depend on Medicaid as a literal lifeline."

McDaniel said justices broke with years of precedent by ruling on grounds not previously raised in filings. Justices ruled that the state Code Revision Commission "substantively altered" the meaning of the Medicaid fraud law when it was codified and that it was originally intended to regulate health facilities. The commission is responsible for making technical corrections to state code. McDaniel noted that the 1993 law remained unchanged for 21 years despite other amendments and attempted amendments by the Legislature over the years. "By improperly transforming a well understood and accepted interpretation of the law, this court has arrogated to itself powers not conferred by the Arkansas Constitution or the General Assembly," he wrote.

The drugmaker said in a statement Monday that it didn’t violate the Medicaid fraud law. "After a thorough review of the case, the Arkansas Supreme Court agreed with our position. We believe that the record speaks for itself and are prepared to vigorously defend our position," the company said. Risperdal was introduced in 1994 as a "second-generation" antipsychotic drug, and it earned Johnson & Johnson billions of dollars in sales before generic versions became available. The drug is used to treat schizophrenia, bipolar disorder and irritability in autism patients. An Arkansas jury found the New Jersey-based companies liable in 2012. Pulaski County Circuit Judge Tim Fox then ordered the companies to pay $5,000 for each of the 240,000 Risperdal prescriptions for which Arkansas’ Medicaid program paid during a 3 1/2-year span.

After their settlement in Texas, J&J lost a number of similar suits – Louisiana, South Carolina, Arkansas. Having sat through the Texas trial, it’s hard for me to imagine how they could win. The off-label marketing, hiding side effects, giving out perks, etc. It was just rampant. I think they settled in Texas because they could tell [as could everyone in the courtroom] that if they let the trial proceed, they stood the chance of getting massacred. But in the other suits, they went to the end – losing the verdicts. Now, they’re neutralizing their losses one at a time on technicalities.