South Carolina Supreme Court Affirms Reduced Penalty in Drug Marketing Case

South Carolina’s highest court further reduced the penalty against a Johnson & Johnson subsidiary accused of deceptive marketing of an anti-psychotic drug.

The decision was to substitute the verdict the court reached in February in order to correct a “mathematical calculation and to clarify that the unfair trade practices judgment against [Janssen Pharmaceuticals] is supported by federal law,” according to the court’s opinion.

On July 8, the state Supreme Court ordered Janssen Pharmaceuticals, Inc., to pay about $124 million – more than $200 million less than the original penalty and a further reduction from the court’s prior ruling.

In 2011, a South Carolina trial court ordered the drug maker to pay the state $327 million, saying Janssen broke the law by downplaying to doctors the links between diabetes and Risperdal and by improperly claiming the drug was safer than competing medications like Eli Lilly & Co.’s Zyprexa.

Circuit Judge Roger Couch assessed a $300 penalty per sample box of the drug that was distributed. He also assessed a $4,000 penalty per publication of the “Dear Doctor” letter, writing that Janssen knew Risperdal was associated with health problems but intentionally hid studies to that effect, instead telling doctors their drug led to lower incidence of diabetes and weight gain than a competing medicine.

Risperdal was introduced in 1994 as a “second-generation” anti-psychotic drug, and it earned Johnson & Johnson billions of dollars in sales before generic versions became available. The drug is used to treat schizophrenia, bipolar disorder and irritability in autism patients.

That total penalty against the drugmaker was the largest drug marketing award in state history and the largest penalty levied for violations of the South Carolina Unfair Trade Practices Act (SCUTPA).

Company attorneys brought their argument to the S.C. Supreme Court, saying the award should be overturned and that Janssen meant no harm and hurt no one. The high court acknowledged in its ruling that state attorneys did not file the case because of concern with the drug’s antipsychotic efficacy, but rather because of its belief that Janssen “engaged in unfair and deceptive conduct in South Carolina by failing to properly disclose Risperdal’s risks and side effects in an attempt to mislead prescribing physicians and the public.”

The state Supreme Court said the jury verdict, which is supported by evidence “bears out the State’s allegations that Janssen engaged in a systematic pattern of deceptive conduct.”

However, the high court more than halved the penalties in February, saying Janssen should only pay the state $136 million because of South Carolina’s three-year statute of limitations on such cases.

In the July 8 ruling, justices reduced civil penalties on the labeling claim by $12 million more, saying that a recalculation of its original assessment was necessary.

Janssen spokeswoman Robyn Frenze said the company was happy with the reduction but still felt the decision should be reversed completely.

“As we have maintained from the outset of this case, we believe that we did not violate South Carolina’s Unfair Trade Practices Act, and are reviewing all of our legal options going forward,” she said.

Spokesman Mark Powell said South Carolina Attorney General Alan Wilson was pleased the court had “once again upheld the rule of law with this legally sound decision.”

Risperdal has been the subject of litigation throughout the country. In 2013, Janssen announced a $181 million settlement with 36 states and the District of Columbia. Janssen admitted no wrongdoing, and South Carolina was not part of that deal.

Last year, the Arkansas Supreme Court declined to reconsider its decision that threw out a $1.2 billion judgment against the company over allegations it violated the state’s unfair trade practices act in improperly marketing Risperdal. A year ago, the Louisiana Supreme Court overturned a $330 million verdict against Janssen.

Topics South Carolina