AUSTIN, Texas (Legal Newsline) - Texas Attorney General Greg Abbott has settled his lawsuit against Janssen Pharmaceutical over the marketing of its prescription antipsychotic drug Risperdal.
The settlement comes during the second week of a trial in Austin. David Siegel of Courtroom View Network, which was broadcasting the possibly $1 billion trial, said Thursday morning that Travis County Judge John Dietz was getting ready to announce the settlement to the jury.
The settlement is worth $158 million. Janssen is a subsidiary of Johnson & Johnson.
"Today's agreement sends a strong message that the State will pursue those who defraud Texas taxpayers," Abbott said.
"Johnson & Johnson's scheme to profit from the Medicaid program by overstating the safety and effectiveness of an expensive drug and improperly influencing officials ended up costing taxpayers millions of dollars."
The company was accused by Abbott of marketing the drug for unapproved uses, a claim also made by other state attorneys general around the country. Abbott had the State join a complaint filed under seal by a whistleblower.
The whistleblower, Allen Jones, was a former employee of the Office of the Inspector General in Pennsylvania. Jones claimed the company paid off a Texas official to have Risperdal become a preferred drug in the state's Texas Medication Algorithm Project.
In suing Janssen in 2006, Jones provided a copy of his complaint to Abbott
"The State of Texas made excessive Medicaid payments based upon... misrepresentations, concealment and failure to disclose material facts and was therefore damaged," an amended complaint says.
"The defendants have profited and the State of Texas has paid excessive Medicaid reimbursements and has been damaged monetarily by the unlawful acts of Defendants."
Bloomberg reported last week that Johnson & Johnson, Janssen's parent company, is paying more than $1 billion to the federal government and most states to resolve a civil investigation.
Twelve states filed their own lawsuits over the drug. That group includes West Virginia, Massachusetts, Montana, New Mexico, Pennsylvania, South Carolina and Louisiana.
Massachusetts Attorney General Martha Coakley was seemingly the last to the party, filing suit in August in Suffolk Superior Court.
South Carolina, represented by the Houston law firm Bailey Perrin Bailey, won its case in March. The firm created a measure of controversy in Pennsylvania, where it was hired by then-Gov. Ed Rendell after donating $91,000 to his campaign fund.
A state judge ruled in June 2010 in the Pennsylvania case that the Commonwealth lacked sufficient evidence to prove the company improperly marketed the drug.
West Virginia also failed in its Risperdal case. A November 2010 ruling overturned a $4.5 million civil penalty.
A month prior, a Louisiana jury reached a $258 million in that state's Risperdal case.
Omnicare, Inc., a company that specializes in providing pharmacy services to long-term care facilities, has found itself in hot water over allegations that it solicited and received kickbacks in exchange for convincing physicians to prescribe Risperdal.
From Legal Newsline: Reach John O'Brien by e-mail at firstname.lastname@example.org.