Court Ruling Clears Way for Jury Trial in $1 Billion Texas Medicaid Whistleblower Lawsuit

A recent state district court ruling has cleared the way for a jury to hear claims filed by the State of Texas and plaintiff Allen Jones based on allegations that pharmaceutical manufacturer Janssen L.P. used false marketing tactics to convince state officials to spend millions on a schizophrenia drug…The drug was no better and no safer despite being substantially more expensive than older medications that treat the same illness, the lawsuit alleges. Janssen worked to build revenue by actively and purposefully marketing the powerful antipsychotic drug for use in children, the lawsuit says, even though the medication was approved only for the very narrow purpose of treating adult schizophrenia.

AUSTIN, TX, Mar 04, 2011 (MARKETWIRE via COMTEX News Network)

A recent state district court ruling has cleared the way for a jury to hear claims filed by the State of  Texas and plaintiff Allen Jones based on allegations that pharmaceutical manufacturer Janssen L.P. used false marketing tactics to convince state officials to spend millions on a schizophrenia drug.

The ruling was issued late Thursday, March 3, 2011, in Judge John Dietz’ 250th District Court in Travis County following summary judgment motions filed by both the State of Texas and Janssen, a division of New Brunswick, N.J.-based Johnson & Johnson (NYSE: JNJ).

The original complaint was filed in 2004 based on evidence uncovered by Mr. Jones during his work as an investigator with the Pennsylvania Inspector General’s Office. The lawsuit says Janssen engaged in a systematic and wide-ranging scheme to convince state Medicaid officials to give preferential treatment to the company’s Risperdal schizophrenia medication.

The drug was no better and no safer despite being substantially more expensive than older medications that treat the same illness, the lawsuit alleges. Janssen worked to build revenue by actively and purposefully marketing the powerful antipsychotic drug for use in children, the lawsuit says, even though the medication was approved only for the very narrow purpose of treating adult schizophrenia. In the years since Risperdal was first introduced, Texas has paid more than $500 million for the drug.

“We are very pleased that a Texas jury finally will be able to scrutinize Janssen’s actions, which we allege have unfairly cost the state’s taxpayers hundreds of millions of dollars for a drug that was no better than older, cheaper medicines,” says Dallas attorney Tom Melsheimer, who represents Mr. Jones with Austin attorney Tommy Jacks. “The defendants fought tooth-and-nail to keep this case from a jury, and that effort has failed.”

The defendants’ total exposure in the anticipated jury trial, currently set for June 21 in Austin, exceeds $1 billion, including damages, penalties, and other potential liabilities, Mr. Melsheimer says.

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