State Settles Largest-Ever Medicaid Fraud Suit

In the state's largest-ever Medicaid fraud recovery, Johnson & Johnson agreed Thursday to pay Texas $158 million to settle a lawsuit over its efforts to get the schizophrenia drug Risperdal on an approved list for the state's poorest patients. 

Texas Attorney General Greg Abbott and a Pennsylvania whistleblower sued Janssen, a subsidiary of Johnson & Johnson, in 2004 over allegations the drug company used faulty research and trips, meals and other perks to convince Texas health officials to put Risperdal on the state's medication algorithm, which determined which drugs were dispensed at state-run hospitals and institutions. 

“Today’s agreement sends a strong message that the state will pursue those who defraud Texas taxpayers,” Abbott said in a statement. “Johnson & Johnson’s scheme to profit from the Medicaid program by overstating the safety and effectiveness of an expensive drug and improperly influencing officials ended up costing taxpayers millions of dollars.”

In preceding medical trials, Risperdal — a drug which can lead to diabetes and excessive weight gain, especially for children — was found to be no better or safer than other generic versions, despite its significantly higher price tag.

Attorneys for the state of Texas argued Janssen marketed the powerful antipsychotic drug for use in children, even though the medication was approved only for the very narrow purpose of treating adult schizophrenia. The lawsuit also alleged the company offered trips and kickbacks to state health officials.

The whistleblower, Allen Jones, uncovered the details while working as an investigator at the Pennsylvania Office of the Inspector General. He was represented by Dallas attorney Tom Melsheimer and Austin attorney Tommy Jacks, both part of the firm Fish & Richardson.

“We are proud to have aided the courageous efforts of Allen Jones, a man who helped shine a light on the dark and corrupt practices that impacted taxpayers across Texas,” Melsheimer said. “He uncovered a terrible effort to push a mind-altering drug on children at the most vulnerable time in their lives.”