Filing alleges drug maker defrauded Texas to get on Medicaid list

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Filing alleges drug maker defrauded Texas to get on Medicaid list

06:48 AM CST on Wednesday, December 17, 2008

By EMILY RAMSHAW / The Dallas Morning News eramshaw@...

AUSTIN – A major pharmaceutical firm funneled kickbacks to Texas health officials, distributed false marketing materials and deployed phony advocacy groups to get its top-dollar schizophrenia drug prescribed to low-income Texans, the state alleges in a new filing in a major fraud lawsuit.

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Download: Read the state's filing

The records in the civil suit allege that Janssen Pharmaceuticals defrauded the state of Texas repeatedly over the last decade to secure a spot for the drug, Risperdal, on the state's Medicaid preferred drug list and on controversial medical protocols that determine which drugs are given to adults and children in state custody.

Texas has spent millions of state Medicaid dollars on the drug, which some recent studies show performs no better than cheap generics, and can lead to diabetes and excessive weight gain, particularly in children.

Janssen officials "targeted Texas Medicaid with their sophisticated and fraudulent marketing scheme," the attorney general's office writes in the filing.

Janssen officials vehemently deny they have done anything improper in Texas and are fighting the suit, in which the state seeks to recover millions of dollars. Kara , a spokeswoman for the New Jersey-based company, said that Janssen is cooperating with the investigation, but that the allegations are untrue.

"We are committed to high ethical standards and responsible behavior," she said. "We take this obligation very seriously."

Similar allegations of influence-seeking by drug companies have become increasingly common in recent years, but some watchdogs say the Texas case against Janssen, a subsidiary of & , stands out.

"It's standard practice in the industry to influence a few key decision-makers," said , a Pennsylvania whistle-blower who brought the Janssen case to the attention of Texas authorities. "But this is perhaps the most transparent example I have seen."

In court papers filed in County, Janssen officials call Mr. an "opportunistic 'late-comer' " who has "at best, only secondhand knowledge of the alleged fraud."

In the early 1990s, drug companies began developing new, expensive schizophrenia drugs, and marketing them as more effective replacements for the generic drugs that had been around since the 1960s. After seeking federal approval, the companies went to work promoting them to the public sector – state governments that held the key to tens of millions of dollars in Medicaid funding.

The state's lawsuit accuses Janssen of getting Risperdal on Texas' list of preferred Medicaid drugs by distributing marketing tools disguised as scientific research: statistically insignificant studies, ghostwritten publications, and "independent" articles that were nothing of the kind.

The company paid third-party contractors and nonprofit groups to promote Risperdal, the state contends, to give state mental health officials and lawmakers the perception that the drug had widespread support. And it had a hand in so-called unbiased research, the suit alleges, providing scientists funding, consulting fees, extravagant meals and travel that compromised their objectivity.

In the mid-1990s, when Texas began designing prescription drug protocols for adults and children in state custody, Janssen provided "substantial funding" and played a role in the protocols' "adoption, revision, promotion, dissemination and implementation," the suit says.

Janssen used Texas' mental health officials as "pitchmen," the suit alleges, "providing them with trips, perks, travel expenses, honoraria and other payments" to get them to promote the drug plan to other states. Risperdal appeared on the children's list – which was never implemented – for eight years before the drug was ever FDA approved for use in juveniles.

Drug company executives "concealed their improper conduct by funneling funding to the state employees through third-party vendors, charitable organizations, advocacy groups and governmental entities," the suit states.

The dozens of allegations in the filing don't include specific details, such as the individuals or amounts of money involved. The Dallas Morning News has reported extensively on the evidence the state is using to build its case, including travel itineraries and cashed checks, receipts, invoices and pledged research funding.

The News has also reported that the state is investigating possible criminal fraud on the part of the state officials and researchers involved in putting Risperdal on the state drug protocols. No charges have been filed.

Ms. , the Janssen spokeswoman, said none of the allegations has any merit.

"What we are saying is that they did not happen," she said.

And she said the company only promotes its products for the purposes the FDA has approved, which are "clearly indicated on our labeling."

The state agencies named in the suit have repeatedly declined to comment on it, citing the pending litigation. But those who seek greater limitations on the use of psychiatric drugs say that, while the pharmaceutical company is under siege, lawmakers and state officials share the blame.

"The state had a duty to spend our money wisely, to set responsible standards, to keep Medicaid kids safe," said Lee Spiller, research director for the Texas branch of the Citizens Commission on Human Rights, which was established by the Church of Scientology, known for its disdain for psychiatric drugs in general. "They blew it."