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AUSTIN, Texas -- Johnson & Johnson subsidiary Janssen LLP said Jan. 19 that it has agreed to pay $158 million to settle claims by Texas that it defrauded the Medicaid program through its off-label promotion of the atypical antipsychotic drug Risperdal (State of Texas, ex rel. Allen Jones v. Janssen LP, No. D-1GV-04-001288, Texas Dist., Travis Co.).
The settlement came seven days into a trial in the Travis County District Court.
"Under the terms of the settlement, Janssen will pay $158 million in full resolution of all claims in Texas," Janssen said in a press statement. "This settlement represents a resolution to claims brought by the State in 2004 for alleged Medicaid overpayment during the years 1994-2008, and will circumvent potentially lengthy and costly appellate activities."
Janssen said the settlement will be allocated to relator Allen Jones, his counsel, Texas and the federal government, which provides Medicaid reimbursements.
Janssen said such settlements "frequently are reached to bring to a conclusion a long-standing litigation where the potential financial exposure to the Company is significant, the outcome is uncertain despite the facts and where there are likely to be long and expensive appellate activities regardless of the outcome at trial."
The Texas Attorney General's Office, which was prosecuting the case, did not comment on the settlement.
The lawsuit was filed in 2004 by Allen Jones on behalf of Texas as a whistle-blower action. Jones is a former investigator for the Pennsylvania inspector general's office.
Texas elected to prosecute the case.
The plaintiffs allege that Janssen misrepresented the risks and approved used of Risperdal, including use in children. The state alleges that the state was defrauded by having to pay for Medicaid prescriptions for Risperdal for off-label uses, costing the state millions.
The state told jurors that it was seeking $1 billion in damages.
A South Carolina federal judge recently affirmed a $327 million judgment against Janssen for its marketing of Risperdal after a trial. Janssen has told shareholders that it will plead guilty to a misdemeanor charge related to the promotion of Risperdal.
Massachusetts has sued the company for its Risperdal marketing. Pennsylvania's trial ended when a state court judge in 2010 declared a nonsuit, finding that the state could not prove that it relied on any marketing statements by Janssen.
Risperdal is one of three atypical antipsychotic drugs that are the subject of litigation. Plaintiffs, including individuals and third-party payers such as states and health insurers, allege that the defendants failed to warn that the drugs caused excessive weight gain, high blood sugar and diabetes.
Plaintiffs allege that they were physically injured or bore expenses to treat the drugs' side effects.
In addition, plaintiffs allege that the drugs were illegally promoted for unapproved uses, such as sedating unruly geriatric patients.
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