La. high court reverses $258 million verdict

Amid the icy sleet of a Southern winter storm, the Louisiana Supreme Court socked the state with the reversal of a $258 million jury verdict.

The court ruled that state Attorney General Buddy Caldwell failed to prove a cause of action against pharmaceutical giants Johnson & Johnson and Janssen Pharmaceutica Inc. in the marketing of an antipsychotic drug called Risperdal. The state claimed the companies downplayed the drug’s health risks to gain market advantage for the drug, which treats schizophrenia and bipolar disorders.

Caldwell said Wednesday that he will study the decision before determining whether to file an application for the full court to rehear the issue.

Janssen issued a statement expressing gratification at the court’s ruling. “We are pleased that the Louisiana Supreme Court has ruled in our favor. Since this lawsuit was filed against us, we have maintained that we did not violate Louisiana’s Medical Assistance Programs Integrity Law,” the company said.

The Louisiana Supreme Court said the state needed to prove the companies violated MAPIL, which calls for civil liabilities as punishment for false health claims. Instead, the court said, the Attorney General’s Office was overly expansive in its arguments.

“There is simply no evidence in this record, and moreover no allegation, that (the pharmaceutical companies) caused any health care provider or his billing agent to knowingly present a claim for payment that is false, fictitious, untrue or misleading,” the court wrote.

The decision clearly is a setback for the state. In addition to the $258 million jury verdict, a lower court awarded $70 million in attorney fees and $3 million in other costs.

Commissioner of Administration Kristy Nichols, the governor’s chief budget adviser, said the ruling should not have an impact on the state’s operating budget.

In 2003, the U.S. Food and Drug Administration announced that certain antipsychotics needed to be labeled with a warning about diabetes and other possible side effects.

Risperdal was included in the group of drugs needing a warning.

Johnson and Johnson and its subsidiary ran into problems not just for allegedly downplaying the drug’s health risks in the wake of the FDA warning.

The companies also allegedly promoted Risperdal for the treatment of dementia without FDA approval.

Last year, Johnson and Johnson reached a $2.2 billion settlement with the federal government to resolve complaints about the handling of Risperdal and other drugs. The company continues to maintain it did nothing wrong.

In Louisiana, a jury found violations based on 7,604 letters mailed to health-care providers and 27,542 sales calls to doctors over a nine-month period. The jury assessed a civil penalty of more than $7,000 per violation.

The Louisiana Supreme Court said Caldwell needed to prove that a doctor knew the marketing statements about Risperdal were misleading and prescribed it anyway even though another drug might have been just as safe, cheaper or safer.

“Certainly the record contains no evidence that any doctor or health care provider knowingly committed malpractice based on the defendants’ improper marketing statements, and then submitted a claim for payment from medical assistance program funds,” the court wrote.

State Supreme Court Justice Jefferson D. Hughes III dissented, writing “One cannot seriously argue that an anti-fraud and abuse statute that penalizes one who violates federal drug labeling laws to the detriment of the citizens of Louisiana presents an absurd consequence.”