Fool me once, shame on you; fool me twice, shame on me. In this case, the Palmetto State, following the lead of other state and federal regulators, has added a new twist to that old saying: fool no one, pay $124 million to the treasury.
Ortho-McNeil-Janssen (“Janssen”) is a pharmaceutical company that distributes a popular antipsychotic drug known as Risperdal. In the 1990s and early 2000s, Risperdal was in fierce competition for market dominance and made some questionable claims about the drug’s side effects. The FDA investigated and compelled the company to correct some defective warning labels.
South Carolina regulators, however, despite the FDA’s settlement of the matter, commenced state action against Janssen under the state’s Unfair Trade Practices Act. That action worked its way up to the state supreme court, which ultimately confirmed a $124 million penalty against the company. That massive fine was sustained on the theory that each labeling violation was its own violation of the statute, worth up to $5,000 each, rather than the overall labeling violation counting as one singular misdeed.
Such a large penalty, disproportionate to the actual harm caused (none) runs afoul of the Eight Amendment requirement that “excessive fines [not be] imposed.” Cato has filed an amicus brief calling for the U.S. Supreme Court to reverse the decisions below and clarify the scope of the Excessive Fines Clause.
Read more at http://www.cato.org/blog/excessive-fines-are-unconstitutional
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