Johnson & Johnson (NYSE:JNJ) Buoyed by a $1.2 Billion Land Mark Ruling

by Tom Carlson | Wednesday, Mar 26, 2014 | 1675 views

Boston, MA, 03/26/2014  (usastockreports)- Johnson & Johnson (NYSE:JNJ) has received one of the best news in the recent past after the Arkansas Supreme Court reversed a $1.2 billion penalty judgment imposed on it. The reversal came after the court found out that the state attorney general had sued the company under a law that only applied on drug companies and health care facilities.

The judgment was imposed in 2012 and acted as one of the largest in the history of state fraud. Johnson & Johnson was accused of improperly marketing and concealing the risks of its drug Risperdal. The company was thus charged for violating state’s Medicaid fraud law under the deceptive trade practices act. Johnson & Johnson in a statement could not hide its joy on the reversal of the judgment.

Johnson & Johnson (NYSE:JNJ) had appealed the penalty claiming the law did not apply to drug makers, three of the court’s seven justices agreed on a reversal of the judgment although they had strong reservations on other matters related to the case.

Accusations levelled against Johnson & Johnson

The company had been accused of hiding risks associated with its drug. Some of the side effects that had raised lots of uproar included weight gain, increased chances of contracting diabetes as well as high probability of strokes in senior citizens.

The verdict nullified penalties amounting to $1.19 billion as well as the $11 million imposed, as a penalty for violation of deceptive trade practices act. The landmark ruling comes at the back of another ruling back in January, where a Louisiana supreme court threw out $258 million judgment saying the prosecution had failed to present enough evidence, on claims that the company had improperly marketed its drug.

Johnson & Johnson (NYSE:JNJ) in November last year agreed to pay $2.2 billion as fines on charges of improperly selling drugs to older adults and children with disabilities.

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