By Corrie MacLaggan
AUSTIN, Texas (Reuters) - Johnson & Johnson said on Thursday it will pay $158 million to settle a Texas lawsuit accusing the drugmaker of improperly marketing its Risperdal anti-psychotic drug to state residents on the Medicaid health program for the poor.
The settlement fully resolves all Risperdal-related claims in Texas, the company said. The agreement is specific to the state of Texas and does not involve other ongoing state or federal Risperdal litigation.
The deal settles claims brought by Texas in 2004 and involves alleged Medicaid overpayments during the years 1994 to 2008 "and will circumvent potentially lengthy and costly appellate activities," according to a statement from J&J's Janssen Pharmaceuticals unit.
The settlement will be paid to the original plaintiff, his attorneys, the state of Texas and the federal government, which provides Medicaid reimbursements, the company said.
The complaint against J&J and several of its units filed in U.S. district court in Texas had alleged company representatives "targeted every level of the Texas Medicaid Program with misrepresentations about the safety, superiority, efficacy, appropriate uses and cost effectiveness of Risperdal."
"Janssen ran amok," Allen Jones, the Pennsylvania-based whistleblower on J&J's marketing practices who was a plaintiff along with state of Texas, told reporters in the Austin courthouse.
"They trashed the Johnson & Johnson credo and they misused Texas and, I believe, well-meaning officials, to further their marketing aims," Jones said. "They subverted science and they induced others to betray the people they were supposed to be taking care of. To me that is reprehensible."
The deal marks the first Risperdal settlement with any U.S. state, Janssen spokeswoman Teresa Mueller said.
J&J's once sterling reputation has been battered in the past two years over quality control problems at several of its plants and manufacturing errors that led to massive recalls of a wide variety of its products, including hip replacements, contact lenses, insulin cartridges and heart devices.
Its biggest black eye came from its McNeil consumer healthcare unit, which in a series recalls was forced to pull hundreds of millions of bottles and packages of popular medicines, such as Children's Tylenol, Motrin, Rolaids and Benadryl.
J&J shares were down 28 cents, or 0.4 percent, at $65 in afternoon trading on the New York Stock Exchange.
(Reporting by Corrie MacLaggan; additional reporting and writing by Bill Berkrot and Ransdell Pierson in New York; editing by Michele Gershberg, Lisa Von Ahn, Gunna Dickson and Andre Grenon)