Ortho McNeil v Arkansas Court Overturns Fraud Jury Verdict Against P
Ortho-McNeil v. Arkansas, Court Overturns Fraud Jury Verdict Against P... Legal Advocacy
The Attorney General invoked the state’s antifraud laws and sued as a consumer of the drug because the state purchases Risperdal for its Medicaid program. After the jury found the defendant at fault, the judge set a $5,000.00 fine for each of the 238,874 prescriptions of Risperdal submitted for payment to the Arkansas Medicaid program. Defendants appealed both the liability and the fines, arguing that the state law is preempted by the federal Food Drug and Cosmetic Act.
AFL attorneys filed AARP’s friend-of-the-court brief which detailed the business practices of pharmaceutical companies in promoting prescription drugs, including the relationship between marketing and labeling. Studies show that stronger warnings on prescription drug labels result in fewer sales, so there is a built-in incentive for drug companies to downplay dangers in labeling. Marketing strategies guided by this incentive include off-label promotion (prescribing drugs for uses beyond what is approved by the FDA) and development of overly close relationships with health care providers — both of which can result in expensive and perhaps inappropriate drug purchases for programs such as Medicaid. The brief highlighted the tension between government programs’ need to keep costs down and drug companies’ drive to maximize profits, and detailed the specific risks Risperdal can pose to older patients, especially those with dementia.
The Arkansas Supreme Court found that the company did not meet the definition of entities covered by the state’s Medicaid fraud law, and that evidentiary problems necessitated overturning the verdict on the deceptive actions law. Having made its decisions on these facts, the court did not go on to address the overarching issues AARP’s brief addressed.
Arkansas Court Overturns Fraud Jury Verdict Against Pharmaceutical Company
Read AARP's (PDF) In a case that addresses the interplay between federal oversight and state Medicaid fraud laws, AARP argued that consumers and states need to be able to enforce state laws in order to protect consumers and safeguard public funds. While leaving those general issues untouched, the highest court of Arkansas on the facts before it found a pharmaceutical company not liable under state laws.Background
The Arkansas Attorney General secured a jury verdict of more than one billion dollars in penalties against a subsidiary of Johnson & Johnson for misrepresentations in drug labels and related materials about the antipsychotic drug Risperdal. The statements in question downplayed the risks of weight gain, diabetes, high blood pressure, hyperprolactinemia, and cerebrovascular problems — some of those conditions disproportionately affecting older users of the drug. For example, in dramatic contrast to the statements made by the drug company, the FDA actually required a black box warning on Risperdal to warn of the increased risk of death for the elderly.The Attorney General invoked the state’s antifraud laws and sued as a consumer of the drug because the state purchases Risperdal for its Medicaid program. After the jury found the defendant at fault, the judge set a $5,000.00 fine for each of the 238,874 prescriptions of Risperdal submitted for payment to the Arkansas Medicaid program. Defendants appealed both the liability and the fines, arguing that the state law is preempted by the federal Food Drug and Cosmetic Act.
AFL attorneys filed AARP’s friend-of-the-court brief which detailed the business practices of pharmaceutical companies in promoting prescription drugs, including the relationship between marketing and labeling. Studies show that stronger warnings on prescription drug labels result in fewer sales, so there is a built-in incentive for drug companies to downplay dangers in labeling. Marketing strategies guided by this incentive include off-label promotion (prescribing drugs for uses beyond what is approved by the FDA) and development of overly close relationships with health care providers — both of which can result in expensive and perhaps inappropriate drug purchases for programs such as Medicaid. The brief highlighted the tension between government programs’ need to keep costs down and drug companies’ drive to maximize profits, and detailed the specific risks Risperdal can pose to older patients, especially those with dementia.
The Arkansas Supreme Court found that the company did not meet the definition of entities covered by the state’s Medicaid fraud law, and that evidentiary problems necessitated overturning the verdict on the deceptive actions law. Having made its decisions on these facts, the court did not go on to address the overarching issues AARP’s brief addressed.