Whistleblower Lawyers—Blockbuster Drug Marketing Fraud Leads to Blockbuster Fine

04/30/2012 // San Francisco, CA, USA // Whistleblower Law Firm (Press Release) // Jeffrey Keller // (press release)

(Whistleblower Lawyers News) — When a judge in Arkansas ordered Johnson & Johnson and one of its subsidiaries to pay $1.2 billion on April 11, he did more than fine the pharmaceutical giant for deceptive marketing of its antipsychotic drug Risperdal. He reaffirmed the potency of false claims act laws — legislation enacted to assess heavy penalties for engaging in any improper conduct when contracting with the government.

Judge Tim Fox, of the Arkansas Circuit Court, made his ruling after a jury found that J&J and its Janssen Pharmaceuticals unit engaged in “false or deceptive” acts by sending thousands of Arkansas physicians a letter stating that Risperdal was safer than competing drugs, and by minimizing or concealing the drug’s risks. Whistleblower lawyers and other experts following the case — one of a string of recent losses for J&J involving Risperdal’s marketing — say the fine ranks as one of the largest ever for a state fraud case involving a pharmaceutical company.

The Arkansas case had been brought under that state’s false claims act statute. Modeled after the federal False Claims Act — legislation dating back to the Civil War but substantially amended in the mid-1980s.

“The False Claims Act is an extremely potent — and necessary — tool for exposing deceptive, fraudulent, and even dangerous behavior,” says Jeffrey F. Keller, a founding partner at Keller Grover, a nationally recognized labor and employment law firm, and a veteran whistleblower lawyer. “It makes sure that word gets out about improper practices, like the deceptive marketing of this drug.”

Judge Fox fined the companies $1.19 billion for some 240,000 violations of Arkansas’s Medicaid fraud law. He fined them an additional $11 million for violations of the state’s deceptive practices act. Prosecutors had accused J&J and Janssen of hiding the side effects associated with Risperdal, a drug used to treat schizophrenia, bipolar disorder, and behavioral problems associated with autism. These can include weight gain, an increased risk of diabetes and, in older patients, an increased risk of stroke.

In January, Texas settled a false claims act case with the Janssen subsidiary for $158 million. Last year, a South Carolina judge levied $327 million in penalties against Janssen. And in 2010, a Louisiana jury awarded nearly $258 million in damages.

The Arkansas Risperdal case is just the latest example of the hefty fines and settlements that have stemmed from whistleblower lawsuits and government investigations into pharmaceutical marketing practices. In November 2011, GlaxoSmithKline agreed to pay $3 billion to settle False Claims Act claims arising out of the company’s sales practices for various drugs, including the diabetes drug Avandia. In 2009, Pfizer Inc. agreed to a $2.3 billion settlement related to marketing of its Bextra painkiller. Also that year, Eli Lilly & Co agreed to pay $1.4 billion in fines stemming from its marketing of its antipsychotic drug Zyprexa.

“These are big numbers because this is a big problem,” says Keller. “The profits on these products are huge and they are made especially from programs like Medicare and Medicaid. But these pharmaceutical products are also marketed to improve people’s health so these companies must comply with the laws. Laws like the False Claims Act which bring significant penalties for engaging in unlawful conduct in dealing with the government are critical to the ongoing efforts to correct this problem. ”

With offices in San Francisco and Los Angles, the whistleblower lawyers of Keller Grover are dedicated, experienced advocates for those dealing with challenging issues in the workplace, including wrongful termination, breach of contract, whistleblower lawsuits, sexual harassment, discrimination, non-compete agreements, bonus and severance disputes, and matters involving the Equal Employment Opportunity Commission (EEOC). Our whistleblower lawyers also represent plaintiffs in California and across the nation in a wide range of important, complex, consumer protection and antitrust class action matters — and have played leading roles in numerous game-changing state and federal cases.

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