Janssen, W.Va. AG argue $4.5M case before state SC

Jessica M. Karmasek Sep. 15, 2010, 11:57am


CHARLESTON, W.Va. (Legal Newsline) - The West Virginia Supreme Court of Appeals on Wednesday heard oral arguments from state Attorney General Darrell McGraw's office and pharmaceutical company Janssen Pharmaceutica.

Janssen is appealing a circuit court's adverse partial summary judgment order, bench trial order and order on post-trial motions in a case brought by McGraw pursuant the West Virginia Consumer Credit and Protection Act.

In March 2009, Brooke County Circuit Judge Martin Gaughan imposed nearly $4.5 million in civil penalties against Janssen after deciding that it made false and misleading communications about two drugs that Janssen manufactures.

Those drugs are Risperdal, an antipsychotic medication, and Duragesic, a patch that delivers a continuous dose of a narcotic pain medicine through the skin.

In 2003, the U.S. Food and Drug Administration required makers of atypicals to warn doctors that such drugs were associated with an increased risk of diabetes. Janssen in November 2003 sent out "false and misleading" letters to doctors that downplayed the risks, Gaughan said in his February 2009 decision.

The case was filed by McGraw in 2004 and was brought under the state's Consumer Protection Act, which authorizes a penalty of up to $5,000 for each violation.

At trial, the parties stipulated to the number or instances that could qualify as violations. The court assessed $5,000 per violation where a message was delivered personally to a West Virginia doctor by a company sales representative and $500 where the information was conveyed by letter or sales brochure.

A total of 4,450 violations were found to have taken place, which would have resulted in a civil penalty of up to $22,250,000 if the court had imposed the maximum of $5,000 per violation.

"The court finds the defendants wording of its November 2003 Risperdal letter was deliberately constructed to circumvent the FDA's mandated warning for an increased risk of diabetes, and deliberately constructed to mislead health-care professionals," Gaughan wrote.

The FDA had already determined that the November 2003 letter was misleading under federal guidelines, Gaughan said in his order.

Following Gaughan's decision, the company served notice that it would appeal. In March, the Court granted the defendants' petition for appeal.

Rebecca Betts of Charleston-based law firm Allen Guthrie & Thomas, PLLC, represented the pharmaceutical company during its oral arguments on Wednesday.

Justice Thomas McHugh was disqualified from Wednesday's arguments. Instead, Mercer County Circuit Judge Omar Aboulhosn was sitting by temporary assignment.

The companies argue that the circuit court's decision to grant the state partial summary judgment based on "informal and advisory" letters must be set aside for four reasons:

-It violates settled issue preclusion law;

-Giving preclusive effect to warning letters the FDA itself deems informal and advisory is preempted because it undermines the FDA's ability to regulate informally;

-In placing exclusive reliance on the Division of Drug Marketing, Advertising and Communications' so-called "fact finding" to declare Janssen's communications misleading, the circuit court abrogated its duty under the First Amendment to conduct independent fact-finding on matters bearing on protection of speech; and

-The court's decision was based on inadmissible hearsay and evidence of subsequent remedial measures.

Betts said she wanted to be clear that the issue wasn't the drugs' communications, including a warning letter and file card. "That's what the attorney general is making it out to be," she said of McGraw's arguments.

She said Janssen still disputes that any statements were false or misleading.

"The issue Janssen has had to this day is that it has never had a chance to defend itself," Betts told the justices.

"I find it hard to believe that these companies face a $4.5 million judgment with no opportunity to cross-examine witnesses or no opportunity to face their accusers," she concluded, adding that the state's case "has no legs."

Fran Hughes, chief deputy attorney general who argued for the state, contends the drugs' communications, which she says are false and misleading, are at the very center of the argument.

"This case is about the health and safety of West Virginians," she said.

Hughes spent considerable time reviewing the facts of the case, including the communications sent to doctors about the two medications.

"Doctors are the eyes and ears of their patients," she said. "They rely on receiving accurate information."

Hughes said the communications were indeed important to the state's argument. "You have to look at the whole process."

From Legal Newsline: Reach Jessica M. Karmasek by e-mail at jessica@legalnewsline.com.

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