A prominent Washington, DC legal group is calling for a state government to overturn a massive $1.2 billion judgment levied last year on Johnson & Johnson subsidiary Janssen Pharmaceuticals because of what it says are preemption issues related to product labeling.
In April 2012, the State of Arkansas was victorious in a lawsuit it filed against Janssen, which was accused of having engaged in deceptive marketing practices for its drug Risperdal.
At issue was whether the company, which had claimed Risperdal was safer than other, similar drugs, had improperly marketed the product by marketing it for "unapproved uses, including various symptoms in children and the elderly."
The settlement was at the time-and remains-one of the largest penalties ever levied against a pharmaceutical company, and is all the more notable because the fine was levied by a state court, and not through federal court. In most cases, large fines result from actions initiated by the Department of Justice in federal court.
Some industry analysts said the victory raised the prospect of other massive settlements or awards against Johnson & Johnson, saying that states had little incentive to back down in light of the potential for lucrative awards.
At the time, Janssen said it planned to appeal the case. "It is our position that an individual state should not penalize a pharmaceutical company for using an FDA-approved package insert or decide for itself whether a company complies with FDA rules," Teresa Mueller, a spokeswomen for J&J, said in an emailed statement to Bloomberg.
Legal Group Says Settlement Improper on Normative and Legal Grounds
But according to the Washington Legal Foundation (WLF), a prominent conservative-leaning legal group, the verdict improperly addressed some of the most important issues in the case, causing serious pre-emption problems.
WLF said it had filed a brief this week that argues that state governments "have no business second-guessing labeling decisions" made by the US Food and Drug Administration (FDA). "We are concerned that the judgment below, if affirmed on appeal, will create tremendous uncertainty among regulated entities in the healthcare field and will make it extremely difficult for them to remain in business in Arkansas without exposing themselves to massive liabilities based on nothing more than good-faith disagreements or misunderstandings regarding regulatory requirements," said WLF Chief Counsel Richard Samp. "The judgment also violates free speech rights because it penalizes speech without any showing that the defendants said anything that was false," Samp said.
In addition to the off-label marketing claims, WLF explained that the case partially hinged on the warning label for Risperdal, which did not include "sufficient information regarding the risks of Risperdal use, including diabetes and weight gain." That information was added at a later time, but all of the labels were FDA-approved, WLF said.
"Although FDA had approved the 2002-2006 labels, Arkansas contended that Janssen violated state law by failing to update the label as soon as it became aware of additional health concerns associated with use of Risperdal," WLF explained. The authority to make such a determination should not and does not belong to any state government, the group argues in its brief.
And even if it did, the group hedged, Janssen was never informed that such an action was in fact illegal, violating its due process rights and the company's right to free speech.