Jessica M. Karmasek Apr. 9, 2013, 5:45pm

LITTLE ROCK, Ark. (Legal Newsline) -- A Washington D.C.-based law and policy center is urging the Arkansas Supreme Court to overturn a $1.2 billion civil penalty imposed by the state based on claims that a drug manufacturer included inadequate risk information on a product label.

In a brief filed in Ortho-McNeil-Janssen Pharmaceuticals v. State of Arkansas, the Washington Legal Foundation argues that states have no business second-guessing the federal Food and Drug Administration's labeling decisions.

The case involves the labeling of Risperdal, an anti-psychotic medication manufactured by Ortho-McNeil-Janssen.

A lawsuit filed by the state of Arkansas alleged that between 2002 and 2006 the warnings section of the drug's label failed to include sufficient information regarding the risks of its use, including diabetes and weight gain.

Information about the risks at issue were included in other sections of the label, but Arkansas contended that the failure to include the risk information in the warnings section rendered the label "false."

Although the FDA had approved the 2002-06 labels, Arkansas argued that Janssen violated state law by failing to update the label as soon as it became aware of additional health concerns associated with use of Risperdal.

In its brief, WLF takes issue with both the state's application of the Arkansas Medicaid Fraud False Claims Act, or MFFCA, and the resulting $1.2 billion judgment -- a $5,000 penalty for

each of the 239,000 Risperdal prescriptions that were filled by Arkansas Medicaid patients between 2002 and 2006.

"Amici are concerned that the judgment below, if affirmed by this Court, will create tremendous uncertainty among regulated entities in the health care field and will make it extremely difficult for them to remain in business in Arkansas without exposing themselves to massive liabilities based on nothing more than good-faith disagreements or misunderstandings regarding regulatory requirements," WLF wrote in its brief, filed Thursday.

The foundation argues that the MFFCA was never intended to apply to product labeling issues.

"The language and history of the MFFCA indicate that the statute was adopted for the purpose of preventing persons from obtaining funds from the Arkansas Medicaid Program by fraudulent means," WLF wrote.

"Arkansas does not allege that either Janssen or Johnson & Johnson (its corporate parent) defrauded the State, or that there was anything improper about the reimbursement payments made by the Medicaid Program to the numerous pharmacies and others who dispensed Risperdal to Arkansas consumers in accordance with a doctor's prescription."

Simply put, the MFFCA is inapplicable to the case, the foundation contends.

"The statute does not authorize Arkansas to seek massive fines from a pharmaceutical company simply because it believes that the company should have affixed stronger safety warnings to a prescription drug," WLF wrote.

"Even if a State is permitted to second-guess FDA's labeling determinations (and Appellants have argued forcefully that States may not do so), there is no indication that that was Arkansas's purpose in adopting the MFFCA."

The judgment also violates free speech rights because it penalizes speech without any showing that the defendants said anything that was false, said Richard Samp, WLF's chief counsel.

The case was brought by Arkansas Attorney General Dustin McDaniel through private lawyers he hired.

In January, Pulaski County Circuit Judge Tim Fox ruled that Janssen Pharmaceuticals, which now operates as Ortho-McNeil-Janssen Pharmaceuticals Inc. and is a division of Johnson & Johnson, must pay $181 million to attorneys from the Houston-based law firm Bailey Perrin Bailey who represented the state in the lawsuit over the drug.

From Legal Newsline: Reach Jessica Karmasek by email at

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Arkansas Supreme Court
625 Marshall St
Little Rock, AR 72201

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