Justices side with Johnson & Johnson on appeal

CHARLESTON -- The West Virginia Supreme Court of Appeals on Thursday found that a lower court erred in finding that communications from Janssen Pharmaceutica and its parent company Johnson & Johnson to state health care providers were false and misleading.

The Court, in its per curiam opinion, reversed the Brooke Circuit Court's order entering partial summary judgment and remanded the case for further proceedings.

The pharmaceutical companies had appealed the circuit court's judgment order, bench trial order and order on post-trial motions in a case brought by West Virginia Attorney General Darrell McGraw in 2004 under the state's Consumer Credit and Protection Act.

In March 2009, Brooke Circuit Judge Martin Gaughan imposed nearly $4.5 million in civil penalties against Johnson & Johnson and Janssen after finding that the petitioners made false and misleading communications about two drugs that Janssen manufactures to physicians in the state.

Those drugs include Risperdal, an antipsychotic medication, and Duragesic, a patch that delivers a continuous dose of a narcotic pain medicine through the skin.

In 2003, the U.S. Food and Drug Administration required makers of atypicals to warn doctors that such drugs were associated with an increased risk of diabetes. Janssen in November 2003 sent out "false and misleading" letters to doctors that downplayed the risks, Gaughan said in his February 2009 decision.

Following the judge's decision, the company served notice that it would appeal. In March, the Court granted the companies' petition.

In September, the Court heard oral arguments from both the Attorney General's Office and the pharmaceutical companies.

The companies argued that the circuit court's decision to grant the state partial summary judgment based on "informal and advisory" letters must be set aside for four reasons:

* It violates settled issue preclusion law;

* Giving preclusive effect to warning letters the FDA itself deems informal and advisory is preempted because it undermines the FDA's ability to regulate informally;

* In placing exclusive reliance on the Division of Drug Marketing, Advertising and Communications' so-called "fact finding" to declare Janssen's communications misleading, the circuit court abrogated its duty under the First Amendment to conduct independent fact-finding on matters bearing on protection of speech; and

* The court's decision was based on inadmissible hearsay and evidence of subsequent remedial measures.

The companies' lawyers argued the issue wasn't the drugs' communications -- including a warning letter and file card -- and disputed that any statements were false and misleading.

The issue, they argued, was that the companies hadn't had a chance to defend itself.

But the Attorney General's Office contended the communications were at the "very center" of the argument.

The Court, in its ruling, wrote, "In sum, the FDA's belief, as expressed in the warning letters and subsequent corrective letters, that Janssen violated the FDCA is not sufficient to establish, as a matter of law, that the Appellants' communications to healthcare providers were actually false and misleading in violation of the Consumer Protection Act."

The Court said it is "fundamental" that every defendant is entitled to defend themselves against "allegations of misconduct."

"Whether Janssen's statements and omissions in the Risperdal DHCP letter and the Duragesic file card are actually false and misleading under the FDCA, and thus constitute 'unfair or deceptive acts or practices' under the Consumer Protection Act, is a question of fact to be decided by a finder of fact," it wrote.

The justices said the Attorney General's Office must present evidence that the pharmaceutical companies' "specific statements and omissions do, in fact, violate the relevant laws."

The companies, the Court said, are "entitled to present evidence to the contrary."

Justice Thomas McHugh disqualified himself from the case. Instead, Mercer Circuit Judge Omar Aboulhosn sat by temporary assignment.