J&J Settles Texas Lawsuit For $158M

The company will pay for plundering the state Medicaid program by overstating the safety of an expensive anti-psychotic drug thanks to a whisleblower.

AUSTIN, Texas (AP) — A lawsuit in which Texas accused Johnson & Johnson of plundering the state Medicaid program by overstating the safety of an expensive anti-psychotic drug and improperly influencing officials and doctors to push the medication has been settled for $158 million, a subsidiary of the health care giant and state officials announced Thursday.

Texas had been seeking up to $1 billion from the drug maker.

Janssen Pharmaceuticals Inc., one of the J&J subsidiaries that had been sued, said in a statement it will pay $158 million in full resolution of all claims in Texas.

The settlement represents a resolution to claims brought by Texas for alleged Medicaid overpayment during the years 1994-2008, the company said.

"Janssen is committed to ethical business practices, and has policies in place to ensure its products are only promoted for their FDA-approved indications," the company statement said.

Tom Kelley, a spokesman for the office of Texas Attorney General Greg Abbott, which was leading the case on behalf of the state, confirmed the settlement but declined further comment.

Testimony in the trial began Jan. 10.

A whistle-blower filed the lawsuit, then Texas joined it. The lawsuit is one of dozens of pending state and federal cases alleging illegal marketing practices and kickbacks in an effort to boost Risperdal over competing drugs. Risperdal is a pill for schizophrenia and bipolar disorder.

Lawyers for Abbott's office and whistle-blower Allen Jones accused Johnson & Johnson and some of its subsidiaries of committing fraud against Medicaid, the joint state-federal health care program for the poor, by making false or misleading statements about Risperdal and its safety, cost and effectiveness compared to other drugs in the 1990s.

Risperdal is used to treat schizophrenia and bipolar disorder.

"Janssen ran amok," Jones said after the settlement was announced. "They trashed the Johnson and Johnson credo, and they misused Texas and I believe well-meaning officials to further their marketing. They subverted science and they influenced others to betray the people they were supposed to be taking care of. To me, that is reprehensible."

At the start of the trial, lawyers for the New Brunswick, N.J.-based health care giant had insisted the company did nothing improper in marketing the drug.

The lawsuit was originally filed in 2004 by Jones, a former employee of the Office of Inspector General in Pennsylvania, who said he learned of Johnson & Johnson's actions in Texas while investigating similar claims in his home state. Texas joined the case in 2006.

As the whistle-blower, Jones will received a portion of the settlement but he said Thursday he doesn't know yet how much it will be.

When asked if the $158 million settlement was enough to punish the drug companies he accused of wrongdoing, Jones said, "They'll feel it, they'll feel it, but I really believe that this industry will not change its behavior until executives are prosecuted, until executives actually go to jail for the frauds the perpetrate."

Last year, a South Carolina judge ruled Johnson & Johnson must pay a $327 million civil penalty after a jury found it guilty of overstating the safety and effectiveness of Risperdal. In 2010, a Louisiana jury found the company violated that state's Medicaid fraud act and awarded it $258 million in damages.

The company is appealing the Louisiana verdict and has said it will appeal the South Carolina verdict as well.


Lozano reported from Houston. Associated Press reporter Linda A. Johnson in Trenton, N.J., contributed to this report.

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