The South Carolina Supreme Court has slashed a $327 million verdict against Johnson & Johnson, effectively cutting more than half from the penalty that one of the corporation’s subsidiaries owes to the state.
A state judge had ordered the verdict against the New Jersey-based pharmaceutical corporation in 2011 over “deceptive marketing” of its antipsychotic drug Risperdal. The drug is manufactured by the company’s Janssen division. Janssen had sent letters to doctors promoting it as safer and more effective than competing medicine. The South Carolina Attorney General’s Office brought a civil suit against Johnson & Johnson in 2007 over violations of the state’s Unfair Trade Practices Act. The company appealed the ruling, calling it excessive.
The state Supreme Court ruled 4-1 on Wednesday that the three-year statute of limitations had already expired for many of the civil claims even before the original 2007 complaint. The justices lowered the new verdict to $136 million plus interest. The Attorney General’s Office had argued it did not realize the letters were deceptive at any point before the statute of limitations would have begun in 2004.
But the court sided with Janssen. “The risks associated with atypical antipsychotics, like Risperdal, were becoming well known by the late 1990s,” Justice John Kittredge wrote for the majority. “The State’s experts testified that the Risperdal label was inadequate as early as 1994 when Janssen began marketing the drug. By all accounts, in the early 2000s, evidence of the risks was pervasive.”
The court also agreed with Janssen that the $300 civil penalty per sample box was excessive, instead reducing that to $100 per box. The justices also reduced the $4,000 civil fine per follow-up sales call to $2,000.
However, the court did uphold the rest of the 2011 ruling.
“The Attorney General’s Office believes today’s ruling is fair and thoughtful,” spokesman Mark Powell said in an emailed statement. “We are pleased with this legally sound decision.”
Prosecutors had argued Janssen sent misleading letters to more than 7,000 doctors in the state that downplayed Risperdal’s links to diabetes. The letters also claimed the drug was safer than competing medicines which began appearing after the company’s patent protections expired.
The company has not yet commented on the ruling.
The court’s lone dissenter was Justice Costa Pleicones, who argued the state judge was within his power to impose the fines for follow-up calls. “Ultimately, the trial judge was in the best position to evaluate Janssen’s conduct, the degree of culpability, the duration of Janssen’s conduct, Janssen’s active concealment of Risperdal’s side effects to South Carolina health care providers, Janssen’s awareness of its deceptive conduct, Janssen’s ability to pay, and the actual impact, if any, resulting from Janssen’s deceptive conduct,” he wrote.