When state attorneys general suspect that a drug company is engaging in illegal marketing, they have two options: sue the company in their home state (usually with the help of a law firm working on a contingency) or participate in a multi-state settlement. Johnson & Johnson’s antipsychotic drug Risperdal have been a goldmine for state AGs who went it alone. Now it’s also paid dividends for the AGs who opted to work together.
In what is being called the largest multi-state health care fraud settlement ever, J&J’s Janssen Pharmaceuticals unit agreed on Thursday to pay $181 million to resolve claims by 35 states and the District of Columbia that it defrauded state Medicaid agencies by promoting Risperdal (and another antipsychotic, Invega) for off-label uses. J&J will not admit any wrongdoing. A press release by the New York State attorney general’s office, which participated in the settlement, called it the largest multi-state health care fraud settlement ever.
The deal does not affect three False Claims Act cases that the U.S. Department of Justice is pursuing against J&J over Risperdal. Bloomberg reported in June that J&J is close to a $2.2 billion settlement in the federal part of the case, as we discussed here. If that settlement goes through, it will be put an exclamation mark on what has already been a banner year for qui tam cases. Abbott Laboratories agreed to pay $1.6 billion in May to settle similar whistleblower claims over its drug Depakote, and GlakoSmithKline reached a similar $3 billion deal in July.
The deal with Janssen does not affect Risperdal cases brought by state AGs that opted out of the multi-state settlement. As we reported here, those cases have mostly been a disaster for J&J and its trial lawyers at Drinker Biddle & Reath, and a boon to the Houston firm of Bailey Perrin Bailey, which represents state AGs on a 15 percent contingency fee. In June, J&J lost a $1.2 billion jury verdict in a case brought by the Arkansas attorney general and Bailey Perrin. The firm also won a $327 million verdict against J&J in another Risperdal case brought on behalf of South Carolina. There have been a few bright spots for J&J though, like a directed verdict in a case Bailey Perrin brought for the Pennsylvania AG’s office.
We reached to Drinker Biddle partner Thomas Campion, who oversees the Risperdal litigation, but didn’t hear back. Janssen president Michael Yang said in a statement, “We have chosen this path to achieve a prompt and full resolution of these state claims.”
