On Thursday, January 19, mega-company Johnson & Johnson and the State of Texas reached a settlement for the bargain price of $158 million in a Medicaid fraud lawsuit. The allegations? That J&J committed Medicaid fraud by engaging in illegal marketing activities and providing kickbacks to boost sales of the anti-psychotic drug Risperdal, used primarily to treat schizophrenia and bipolar disorders. The suit also alleged that J&J told doctors that the drug could be used to treat children, for which it did not have FDA approval. Oops.
And why was $158 million a bargain? Well, consider what has happened to the company in other states that have also sued J&J on similar theories. In Louisiana, the Court ordered the company to pay $258 million; in South Carolina, the bill was a cool $327 million.
As reported by the Washington Post, then, $158 million doesn’t look so bad:
“For Johnson & Johnson, it’s a mighty easy result,” said Eric Gordon, a clinical professor at the University of Michigan’s Ross School of Business. “The legal team at Johnson & Johnson are doing high fives.”