The judge said the company and its US subsidiary Janssen Pharmaceuticals had lied about the drug’s benefits and risks in order to obtain Medicare reimbursement.
The fine is among the largest ever imposed in a US state fraud case involving a drug company.
J&J, which denies any improper conduct or actual harm, is calling for a retrial.
The judge, Tim Fox, fined the companies $1.19bn for nearly 240,000 violations of the state’s Medicaid fraud law and $11m for violations of its law on deceptive practices.
To date, 11 states have prosecuted J&J over its marketing of Risperdal, which is approved as a treatment for schizophrenia and bipolar disorder in adults and behaviour problems in young people.
Prosecutors have claimed that J&J inaccurately stated Risperdal to be more effective than generic alternatives, while concealing the increased risks of diabetes, stroke and weight gain associated with the drug.
Since reimbursement for Risperdal was available through the state-funded Medicaid system, J&J is accused of defrauding state authorities.
Arkansas attorney general Dustin McDaniel commented that the court’s verdict “sends a clear signal that big drug companies like Johnson & Johnson and Janssen Pharmaceuticals cannot lie to the FDA, patients and doctors in order to defraud Arkansas taxpayers”.
The fine was based on minimum penalties for each individual violation of state law through a prescription or marketing message – coming in this case to over 250,000 violations.
Janssen spokeswoman Teresa Mueller said the company would call for a retrial and, if that was denied, would appeal against the state verdict.
The court “did not show any Arkansas patient was ever harmed by using Risperdal” or “that any Arkansas physician or Arkansas Medicaid was ever misled by the drug’s label or package insert,” she asserted.
In the last year, J&J has reached a $158m settlement with Texas over the marketing of Risperdal and been fined $327m by South Carolina.
At the federal level, the company is in talks with the Justice Department to settle a misdemeanour criminal charge. However, the JoD has rejected a $1bn offer from J&J to settle all outstanding civil charges.