Lawsuit says Texas was duped on drug

From the Star Telegram

A pharmaceutical company duped the state of Texas into spending millions of dollars on expensive psychiatric drugs and made improper payments to at least one state official, according to a lawsuit filed by a whistle-blower and joined by the Texas attorney general's office.

At the heart of the suit is a controversial state program that instructs doctors at state-funded healthcare facilities on which medicines to prescribe for a variety of mental illnesses.

The Star-Telegram reported last year that more than $3 million had been donated to the program by drug companies and an organization created by a drug-company founder. Dr. Steven Shon, who managed the program, had taken more than 80 trips throughout the country and abroad to promote it, with his expenses often underwritten by drug companies.

The lawsuit targets Johnson & Johnson and related companies, including Janssen Pharmaceutical, which makes the antipsychotic drug Risperdal. The suit was filed in 2004 in Travis County by Allen Jones, a former employee in the Pennsylvania Office of Inspector General who investigated drug-company ties to his state's officials. In the process, he learned of allegations related to Texas.

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

Brand-name expenses

While the suit does not name the "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 Shon.

Shon, who left the Department of State Health Services this fall during the investigation, said he has not received money from drug companies in connection with his work for the state. Money went to pay 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 for consulting work unrelated to his state job several years ago. He said he got approval from the department's legal staff, but commission spokeswoman Stephanie Goodman said the agency was unaware of any such payments and would not have approved them.

The lawsuit alleges that Johnson & Johnson and its subsidiaries misled state officials about the benefits of Risperdal, including promoting it for treating children when it had not been federally approved for such use. The company's influence led the state to buy the expensive brand-name drug instead of cheaper generic alternatives, according to the suit. The result, it alleges, was that the state paid too much 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 not available in generic form. The plan allows doctors to deviate from the recommendations if they have sound reasons, 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 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 are huge business 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 the same period -- fiscal years 2003 to 2005 -- almost $700 million was spent on all antipsychotic medications combined. That does not include care for people 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 has said the foundation is independent of the company.

The exact amount of money 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 from his position "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 was told "the direction I was going in was not the direction the department was going in." He added that he believes the pressure of the investigation played a role.

Shon said that 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. 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 have reviewed the recommendations and believe they are valid, she said.