When Crime Pays: J&J’s Drug Risperdal

Risperdal is a billion-dollar antipsychotic medicine with real benefits — and a few unfortunate side effects.

It can cause strokes among the elderly. And it can cause boys to grow large, pendulous breasts; one boy developed a 46DD bust.

Yet Johnson & Johnson marketed Risperdal aggressively to the elderly and to boys while allegedly manipulating and hiding the data about breast development. J&J got caught, pleaded guilty to a crime and has paid more than $2 billion in penalties and settlements. But that pales next to some $30 billion in sales of Risperdal around the world.

In short, crime pays, if you’re a major corporation.

Oh, and the person who was in charge of marketing the drug in these ways? He is Alex Gorsky, who was rewarded by being elevated to C.E.O. of J&J. He earned $25 million last year.

This tale is told in a devastating 58,000-word epic by Steven Brill that is being serialized on The Huffington Post. Some has already been covered in The Times and other papers, or in Senate investigations and innumerable court decisions, but it’s still wrenching to read the comprehensive account of how a company put profit above everything and then benefited handsomely for doing so.

The story begins when J&J’s previous antipsychotic medicine ended its patent life, so sales plunged as generics gained market share. In 1994, J&J released Risperdal as a successor, but the Food and Drug Administration said it wasn’t necessarily better than the previous version and in any case was effective primarily for schizophrenia in adults. That’s a small market, and J&J was more ambitious. It wanted a blockbuster with annual revenues of at least $1 billion.

So J&J reinvented Risperdal as a drug for a broad range of problems, targeting everyone from seniors with dementia to children with autism.

The company also turned to corporate welfare: It paid doctors and others consulting fees and successfully lobbied for Texas to adopt Risperdal in place of generics. This meant that the state paid $3,000 a year for each Medicaid patient taking it, rather than $250 a year for each, Brill says.

Building on that, J&J reached out to Omnicare, a company that provided pharmaceutical services in nursing homes. The two companies cut a deal so that Omnicare doctors would prescribe Risperdal, and the profits would be shared with Omnicare. (Yes, that’s called a kickback.)

Even though Risperdal wasn’t approved for the elderly, J&J formed a sales force, called ElderCare, with 136 people to market it to seniors. The F.D.A. protested and noted that there were “an excess number of deaths” among the elderly who took the drug.

J&J seems to have shrugged. It was making vast sums, and the F.D.A. didn’t have teeth.

At the same time, J&J was also expanding into another forbidden market: children. The company began peddling the drug to pediatricians, so that by 2000, more than one-fifth of Risperdal was going to children and adolescents.

In 2003, the company had a “back to school” marketing campaign for Risperdal, and a manager discussed including “lollipops and small toys” in sample packages, Brill says.

All this was great for business, and by 2004 Risperdal was a $3-billion-a-year drug.

One challenge was that a J&J study had found that Risperdal led 5.5 percent of boys to develop large breasts, a condition known as gynecomastia. J&J covered this up, Brill says, quoting internal documents.

I asked J&J and Gorsky for comment. In particular, I wanted to understand why an executive who presided for years over conduct that the company conceded was criminal had been elevated to chief executive.

Gorsky declined to comment, and a company spokesman, Ernie Knewitz, didn’t really want to have that conversation. Knewitz did say the company “vehemently” disagrees with Brill’s take, denies a cover-up and considers Risperdal a useful drug with real benefits.

He’s right: Risperdal is a good drug that helps people. But it was marketed too broadly, and the system failed to protect consumers.

Brill calculates J&J may in the end have to pay a total of $6 billion in settlements for its misconduct. But he estimates the company made $18 billion in profits on Risperdal, just within the United States (on $20 billion in domestic sales, and there was $10 billion more in sales abroad).

Last week the Appeal of Conscience Foundation, an interfaith organization, announced it would honor Gorsky with an award as a “man of integrity” and a “corporate leader with a sense of social responsibility.”

So even though the company was caught, criminality paid off, for the company and for executives.

That’s why we need tougher enforcement of safety regulations, and why white-collar criminals need to be prosecuted (as Attorney General Loretta Lynch has promised will happen).

Risperdal is a cautionary tale: When we allow businesses to profit from crimes, we all lose.

Courtesy: NY Times