J&J, Janssen Fined $1.1B Over Risperdal

Johnson & Johnson (NYSE: JNJ) was fined $1.1 billion by an Arkansas judge for allegedly concealing the risks of the antipsychotic drug Risperdal.

Circuit Judge Tim Fox on Wednesday ruled that New Brunswick, N.J.-based Johnson & Johnson and subsidiary Janssen Pharmaceuticals Inc. are subject to a $5,000 penalty for each of 240,000 Risperdal prescriptions that were paid for by the Arkansas Medicaid program. The companies were also fined an additional $2,500 for each of more than 4,500 letters that were sent to Arkansas doctors by Jannsen, Business Week reported Thursday.

The state of Arkansas alleged that Johnson & Johnson and Jannsen misled doctors about the side effects of Risperdal by minimizing or concealing the dangers associated with it. The state's lawsuit contended that Johnson & Johnson and Janssen defrauded Arkansas' Medicaid program by misleading doctors about the risks of Risperdal and marketed it as safer than competing drugs, Bloomberg reported.

We are disappointed with the jury's decision. We will consider our options for appeal after the judge has ruled on our post-trial motions, a statement from the companies said.

Johnson & Johnson has argued that the mailing it sent to doctors was approved by the FDA and thus did not violate Arkansas law.

The Arkansas Risperdal fine is just the latest in a string of fines and recalls against Johnson & Johnson and its subsidiaries. In January, Texas settled a Risperdal lawsuit against Janssen for $158 million, while South Carolina brought civil penalties of $327 million against Janssen last year. Likewise, $258 million in damages were awarded in Louisiana in 2010, according to the New York Times.

According to Business Week, as of March 31, the company had recalled over 50 products since the start of 2010.

The ruling against the companies sends a clear signal that big drug companies like Johnson & Johnson and Janssen Pharmaceuticals cannot lie to the U.S. FDA (U.S. Food and Drug Administration), patients and doctors in order to defraud Arkansas taxpayers of our Medicaid dollars, State Attorney General Dustin McDaniel said in an emailed statement, according to Business Week.

Johnson & Johnson shares fell 13 cents to $64 in afternoon trading.