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April 9, 2014 Healthcare Fraud

Arkansas Supreme Court Takes Different View of Risperdal Fraud Case

Late last year, the federal Department of Justice settled a long-running dispute with drug maker Johnson & Johnson over allegations of the off-label marketing of the anti-psychotic drug Risperdal. As is often the case, Johnson & Johnson also faced several state False Claims Act and Deceptive Trade Practices Act allegations, as Medicaid and Medicare funding is provided jointly by the federal and state governments. Despite Johnson & Johnson agreeing to pay $2.2 billion to the federal government in November of last year over similar allegations, several states, including Arkansas, are taking a different view on the propriety of holding drug makers liable to taxpayers for their marketing practices.

What Is Off-Label Marketing?

Off-label marketing is a hot topic within the context of Medicaid and Medicare fraud. To summarize, a drug maker is only permitted to market a drug for uses approved by the FDA following months (sometimes years) of clinical trials and research. Off-label marketing occurs when a drug company encourages doctors to prescribe a medication to treat a symptom or condition that was not tested by the FDA.

Off-label marketing is also problematic under the False Claims Act. If a Medicaid or Medicare beneficiary is offered a drug for an off-label purpose, the subsequent submission of an invoice for reimbursement for that patient is considered a false claim to the government. Under the FCA, an individual with information about off-label marketing can file a private lawsuit under the FCA’s qui tam provisions, which can result in an award of 15 to 30 percent of the ultimate recovery.

Arkansas Supreme Court Reverses Landmark Off-Label Marketing Case

In 2012, a jury in Arkansas found for the state in a highly-publicized case involving Johnson & Johnson’s drug Risperdal. This drug is used for the treatment of schizophrenia and bipolar mania; however, J&J was alleged to have improperly marketed the drug as safe and effective, downplaying known side effects, including an increased risk of stroke, seizures, and death in elderly patients. The company also faced allegations that it improperly marketed the drug for the treatment of autism in children, for which it did not have permission. The court allowed for a $5,000 fine for each of the 240,000 Risperdal prescriptions submitted to Arkansas Medicaid, resulting in a verdict of $1.2 billion.

The Arkansas Supreme Court disagreed with the finding and released J&J from the confines of the record-breaking ruling earlier this week. In its opinion, the Court concluded that false statements about a drug and false claims for reimbursement for that drug from Medicaid are two separate and distinct issues – the latter not falling within the state’s False Claims Act purview.


This case showcases the various results that can occur when states apply their False Claims Acts to cases already adjudged by the federal government as evoking liability or a settlement. However your state views off-label marketing in light of its FCA, you can rest assured that the federal jurisdiction takes a very dim view of this practice and consistently holds it to be in violation of the FCA. If you are aware that your doctor or employer is marketing drugs to patients for uses not approved by the FDA, we encourage you to come forward. For more information about the whistleblower process, contact Berger Montague today!