The South Carolina Supreme Court cut more than half of a $327 million penalty levied on a Johnson & Johnson subsidiary for whitewashing links between its anti-psychotic drug Risperdal and diabetes, limiting claims to a three-year statute of limitations. The state high court cut the penalty to $136 million, limiting claims to three years from a January 2007 tolling agreement between the subsidiary and the state.
The court agreed with Ortho-McNeil-Janssen Pharmaceuticals Inc.’s argument that the trial court erred in granting the state’s motion for a directed verdict on the statute of limitations on claims over alleged labeling violations. The court said:
The procedural dilemma we confront is that the statute of limitations issue concerning the labeling claim was resolved at trial through principles of equitable tolling. A determination in equity is not proper for a directed verdict motion insofar as determining what matters should be submitted to the jury.
The state supreme court rejected Janssen’s argument that the statute of limitations bars all the state’s claims over the Risperdal labels. The court’s opinion stated further:
We reject Janssen’s position, for Janssen misapprehends the statute of limitations and the concept of continuous accrual of this … cause of action. The labeling claim presents a series of discrete, independently actionable wrongs that are at the core of the typical unfair trade practice action.
Janssen also argued that the statute of limitations applied to claims that it violated the South Carolina Unfair Trade Practices Act by sending “dear doctor” letters that glossed over diabetes risks from Risperdal. The November 2003 “dear doctor” letter spurred the U.S. Food and Drug Administration (FDA) to send a warning letter to Janssen in April 2004, according to the ruling. The court ruled that until the FDA sent its letter, Janssen’s deceptive conduct couldn’t have been discovered before then.
Janssen introduced Risperdal in 1994. Starting in the mid-1990s, evidence began to emerge that Risperdal and other atypical anti-psychotic drugs were associated with diabetes and other metabolic side effects, according to the ruling. The state of South Carolina filed suit in 2007, arguing that Janssen sent misleading letters to more than 7,000 to protect billions of dollars in Risperdal sales. The trial court ordered Janssen to pay $327 million in 2011. States such as Louisiana and West Virginia launched cases against J&J after the FDA ordered the company in 2003 to revise prescribing information for Risperdal to include a warning for an increased risk of diabetes among users.
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