AUSTIN, Texas — A clash between Texas and Johnson & Johnson that could end up costing the drug maker $1 billion opened Tuesday with prosecutors accusing the company of plundering the state Medicaid program by overstating the safety of an expensive anti-psychotic drug and improperly influencing officials and doctors to push the medication.
In their opening statements, lawyers for Texas Attorney General Greg Abbott and whistleblower Allen Jones accused Johnson & Johnson and some of its subsidiaries of committing fraud against Medicaid, the joint state-federal health care program for the poor, by making false or misleading statements about Risperdal and its safety, cost and effectiveness compared to other drugs in the 1990s.
Risperdal is used to treat schizophrenia and bipolar disorder.
The lawsuit, one of several filed by states against the company, was originally filed in 2004 by Jones, a former employee of the Office of Inspector General in Pennsylvania, who said he learned of Johnson & Johnson's actions in Texas while investigating similar claims in his home state. Texas joined the case in 2006.
Texas is asking the jury to force Johnson & Johnson to pay back $579 million paid to fill prescriptions for Risperdal and levy as much as $500 million more in penalties. The federal government would get about half of any money awarded by the jury and Jones, the whistleblower, could collect about 20 percent.
Tom Melsheimer, an attorney for Jones, told jurors to "send a message ... to refuse to let corporate greed feast on taxpayer money."
Johnson & Johnson insists the company did nothing improper in marketing its drug, and Steve McConnico, one of its attorneys, said doctor testimony will support the drug's use as an improvement over the previous generation of anti-psychotic drugs.
"The reason Risperdal did well was that it worked. The market proved it," McConnico said. "The idea that we're some kind of puppet master (over doctors) simply is not common sense."
The Texas lawsuit is among dozens of pending state and federal cases alleging illegal marketing practices and kickbacks in an effort to boost Risperdal over competing drugs. And a verdict against the New Brunswick, N.J.-based company wouldn't be the first.
Last year, a South Carolina judge ruled Johnson & Johnson must pay a $327 million civil penalty after a jury found it guilty of overstating the safety and effectiveness of Risperdal. In 2010, a Louisiana jury found the company violated that state's Medicaid fraud act and awarded it $258 million in damages.
The company is appealing the Louisiana verdict and has said it will appeal the South Carolina verdict as well.
Risperdal was among several "second generation" anti-psychotic drugs developed in 1990s to alleviate some of the most significant side effects of earlier medications that dated to the 1960s. Those earlier drugs cost pennies on the dollar to produce compared to Risperdal, which earned the company billions of dollars in sales before generic versions became available a few years ago.
Initially approved for adults with schizophrenia, doctors soon began prescribing it for wider use in Texas mental hospitals and prisons for "off-label" uses, including the treatment of children. The lawsuit alleges the drug maker falsely told doctors Risperdal was safe to use with children when federal regulators had not approved its use.
Risperdal and similar anti-psychotic drugs have been linked to increased risk of strokes and death in elderly dementia patients, seizures, major weight gain, onset of diabetes and potentially fatal high blood sugar.
In a statement issued before the Texas trial, Johnson & Johnson and its subsidiaries issued a statement: "We are committed to ethical business practices and have policies in place to ensure that our products are only promoted for their FDA-approved indication."
Texas was a key market for Johnson & Johnson and subsidiary drug maker Janssen Pharmaceutical LLC because schizophrenic patients often rely on Medicaid to pay for medications and Texas has one of the country's largest populations of Medicaid patients, prosecutors said.
The lawsuit accuses the drug makers of promoting misleading interpretations of research studies and paying millions of dollars to influence the creation of state mental health medication guidelines favoring Risperdal.
"Once the defendants executed their plan in Texas, they exported it all over the country by pointing to Texas as a model to follow," Assistant Attorney General Cynthia O'Keeffe told jurors.