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Excellent article by journalist Rob Waters published by the online news service Bloomberg.com about how Texas massively over-spent taxpayer money on psychiatric drugs because of drug company fraud.

J&J Sued by Texas in Whistleblower Case on Marketing (Update1)

Date Published:

Dec 28, 2006 03:00 AM

Author: Rob Waters

Source: Bloomberg.com

Dec. 28, 2006 (Bloomberg) -- A Johnson & Johnson unit misled Texas health officials about the risks of an antipsychotic drug to increase prescriptions, according to a whistleblower lawsuit joined by the state attorney general.

The suit claims that J&J's Janssen Pharmaceutica unit caused Texas to overspend on Risperdal, the world's second-best-selling schizophrenia drug last year. The case is one of several against makers of antipsychotics and stems from Texas prescribing guidelines directing state-funded doctors to give priority to newer, more expensive drugs.

The guidelines and deceptive marketing techniques boosted sales of Risperdal, raising costs for Texas and endangering patients, according to the complaint, which was secret until it was unsealed Dec. 15. The state is seeking unspecified damages. Risperdal sales were $10 billion in the U.S. from 2001 through 2005, according to IMS Health Inc.

``This is a case about sales and marketing trumping medical science,'' said Thomas Melsheimer, an attorney for the original plaintiff, in a Dec. 19 phone interview. ``The basic allegation is that Janssen promoted Risperdal use not for sound medical reasons but for economic reasons.''

Tom Kelley, a spokesman for Texas Attorney General Greg Abbott, declined yesterday to comment on the case.

Johnson & Johnson, the maker of thousands of health-care products from Band-Aids to heart devices, does ``not promote our products for off-label use,'' said Ambre Morley, a spokeswoman for the New Brunswick, New Jersey-based company, in an interview this week. J&J doesn't comment on litigation, she said.

Shares of J&J rose 41 cents to $66.42 in New York Stock Exchange composite trading. The share price has risen 11 percent this year, underperforming the 13 percent rise among members of the Standard & Poor's 500 Pharmaceuticals Index.

Texas Law

The complaint was initiated in 2004 by Allen Jones, a former Pennsylvania state investigator. Under Texas law, whistleblower suits are dismissed unless the attorney general joins them. Jones may collect 15 to 25 percent of any payments by J&J, Melsheimer said.

Lawsuits across the U.S. accuse drug companies of engaging in deceptive marketing by overstating the effectiveness and understating the risks of newer antipsychotics. The suits also claim companies promoted the drugs for unapproved uses.

Mississippi, Louisiana, Alaska and West Virginia sued Eli Lilly & Co. this year on behalf of their Medicaid health programs for the poor, saying the company fraudulently touted the antipsychotic Zyprexa for unapproved uses. Indianapolis-based Lilly settled about 8,000 personal-injury complaints for $700 million in 2005 and faces 4,000 more claims.

Lilly spokesman Phil Belt said yesterday that Lilly is ``committed to being transparent about the risks of Zyprexa.'' He declined to comment on specific cases.

Zyprexa was the world's top-selling schizophrenia drug with $4.2 billion in revenue last year. Risperdal was second with $3.6 billion.

AstraZeneca

London-based AstraZeneca Plc, the maker of the third-best- selling antipsychotic, Seroquel, stands accused in more than 200 federal and state lawsuits of concealing the diabetes risk faced by users. AstraZeneca is ``vigorously defending'' the cases, said spokesman Jim Minnick in an e-mailed statement. Sales rose 36 percent last year to $2.8 billion.

The Texas complaint says the health department received as much as $6 million in contributions from Janssen and other parties to implement treatment guidelines under the Texas Medication Algorithm Project, known as TMAP. The guidelines were then exported to other states through training programs.

The largest contributors, according to the lawsuit, were Janssen Pharmaceutica and the Robert Wood Johnson Foundation, a charity endowed by the co-founder of J&J.

The Princeton, New Jersey-based foundation provided three grants totaling $2.8 million to evaluate TMAP as part of an effort ``to improve treatment of chronic disease,'' said spokesman David Morse, in a phone interview this week.

Standardize Treatment

The Texas program began in 1996 as a way to standardize prescribing of medication to state mental patients, led by Steven Shon, then medical director for behavioral health for the Texas health department, and University of Texas academics.

Shon resigned effective Oct. 31 at the request of Charles Bell, acting health department commissioner, said Ted Hughes, a spokesman for the Texas Health and Human Services Commission. Bell requested the resignation after being briefed on the suit by the attorney general's office, Hughes said.

Shon also consulted for Janssen, an arrangement the department was unaware of and wouldn't have approved, Hughes said. Shon didn't respond to requests for comment left on his home telephone answering machine.

`Significant Increase'

After the guidelines were adopted, Janssen ``experienced a significant increase in sales of Risperdal'' in Texas and worked to bring the program to other states, the suit alleges. State officials ``traveled extensively, at the expense of defendants, to tout the wonders of the new drugs,'' the complaint says.

Janssen ``improperly influenced state decision-makers with trips, perks, travel expenses, honoraria,'' and paid state officials ``to speak in their official capacities'' to promote the drugs, the complaint says.

One of the first states to adopt prescribing guidelines was Pennsylvania. Jones, the whistleblower who filed the suit, was an investigator for Pennsylvania's Office of the Inspector General in Harrisburg. Assigned to look into payments made to state agencies and employees, he interviewed Janssen officials, the complaint says.

Jones says he was blocked by his superiors from investigating company marketing practices and was fired when he continued to do so and leaked information to reporters.

The case is Texas v. Janssen LP, No. GV-401288 in Travis County District Court, Austin.

To contact the reporter on this story: Rob Waters in San Francisco at rwaters5@bloomberg.net .

Last Updated: December 28, 2006 16:18 EST

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2mpCNBojB2I#

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