Vested Mental Health Interests Under Attack - Texas Lawsuit

Lawsuit says drug companies conned state

By MARK HORVIT

Star-Telegram staff writer

A recently unsealed lawsuit accuses Johnson & Johnson and related companies, including Janssen Pharmaceutical, of conning the state of Texas into spending millions of dollars on costly psychiatric drugs.

The suit targets a controversial state program that instructs doctors at state-funded healthcare facilities about which medicines to prescribe for a variety of mental illnesses.

The suit was filed in 2004 in Travis County by Allen Jones, a former employee of the Pennsylvania Office of Inspector General who investigated drug companies' ties to his state's officials. In the process, he learned of allegations related to Texas. The Texas attorney general's office has joined the lawsuit.

The lawsuit was sealed until late Friday while the attorney general's office looked into the case. The suit seeks damages that would amount to millions of dollars.

Brand-name expenses

While the suit does not name a "state mental health program decision-maker" who it alleges received payments and other benefits, a spokeswoman for the Texas Health and Human Services Commission confirmed that the lawsuit refers to Dr. Steven Shon, who managed the program. Shon took more than 80 trips throughout the country and abroad to promote it, with his expenses often underwritten by drug companies.

Shon, who left the Department of State Health Services this fall while the investigation was ongoing, said he has not received money from drug companies in connection with his work for the state. Money paid for his travel expenses or to reimburse taxpayers for his time away from the office, he said.

"These assertions are really ridiculous," he said.

However, Shon said he received a few thousand dollars from Janssen several years ago for consulting work unrelated to his state job. He said he got approval from the department's legal staff, but commission spokeswoman Stephanie Goodman said the agency was unaware of payments and would not have approved them.

The lawsuit alleges that Johnson & Johnson and its subsidiaries misled state officials about the benefits of the antipsychotic drug Risperdal, including promoting it for treating children when the drug had not been federally approved for such use. The company's influence led the state to purchase the expensive brand-name drug instead of cheaper generic alternatives, according to the lawsuit. The result, it alleges, was that the state paid excessive amounts in claims for Medicaid, which covers medical costs for low-income people.

Spokesmen for Janssen and the attorney general's office declined to comment Tuesday.

Drug-company donations

A major portion of the lawsuit focuses on the Texas Medication Algorithm Project, which Shon coordinated. That program offers a series of treatment plans, or algorithms, for various mental illnesses, including which drugs to use. In many cases, the plans recommend the newest drugs, which are the most expensive and are not available in generic form. The plan allows doctors to deviate from the recommendations if they have sound reasons to do so, state officials say.

Supporters of the algorithms say that in many cases, the newer drugs are more effective than their older counterparts and can have fewer debilitating side effects. But many of the newer drugs have come under increasing scrutiny from federal regulators, including warnings that they can increase the risk of suicidal behavior or can lead to illnesses such as diabetes.

Such drugs generate much income for pharmaceutical companies. In a recent three-year period, more than $190 million was paid in Texas for outpatient Medicaid claims for Risperdal alone, according to the state Health and Human Services Commission. During those same years -- 2002 to 2005 -- almost $700 million was spent on all antipsychotic medications combined. That does not include care for those who are in state institutions.

Drug companies, including Janssen, gave the state more than $1 million to help promote the plan. And the Robert Wood Johnson Foundation, established by the founder of Janssen parent company Johnson & Johnson, gave $2 million. A company spokesman previously said the foundation is independent of the company.

The exact amount donated by the companies remains unclear. Shon has acknowledged that his agency did not always seek required approval from the department's governing board before accepting donations.

Forced out

Shon left his job with the state in October. Goodman would not say why Shon left but confirmed that department officials had been notified of the attorney general's investigation before his departure. In a memo provided to the Star-Telegram by the commission, the department's acting commissioner informed Shon that he was being terminated "effective immediately." No reason was given.

But Shon said he was given the option of resigning or being terminated, and he chose to leave. He said he was told that "the direction I was going in was not the direction the department was going in." He added that he believes that the pressure of the investigation played a role.

Shon said that in his role as coordinator of the project, he did not make decisions about which drugs should be recommended. Those were made by a panel of experts, he said.

He was not the only state official to make trips to promote the algorithms in various states and countries, including Italy, Japan and South Korea. Various versions of the Texas program have been adopted in more than a dozen states.

Goodman said the department still supports the algorithm program. A number of experts believe they are valid, she said.