Kusserow’s Corner: Johnson & Johnson Settles with DOJ for $2.2 Billion

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On November 4, 2013, the Department of Justice (DOJ) announced that Johnson & Johnson and three of its subsidiaries have agreed to pay more than $2.2 billion to resolve criminal and civil claims that they marketed prescription drugs for uses that were never approved as safe and effective—and that they paid kickbacks to both physicians and pharmacies for prescribing and promoting these drugs. This settlement resolves multiple investigations involving the antipsychotic drugs Risperdal® and Invega®, as well as the heart drug Natrecor®, and other Johnson & Johnson products.

At the same time, the DOJ filed criminal information alleging that Johnson & Johnson subsidiary Janssen Pharmaceuticals Inc. violated the federal Food, Drug, and Cosmetic Act (FDC Act) by introducing Risperdal into the market for unapproved uses. In its plea agreement, Janssen admitted it promoted this drug to health care providers for the treatment of psychotic symptoms and associated behaviors exhibited by elderly, non-schizophrenic patients who suffered from dementia, even though the drug was approved only to treat schizophrenia. In separately filed civil complaints, it was further alleged that both Johnson & Johnson and Janssen Pharmaceuticals promoted Risperdal and Invega to doctors – and to nursing homes – as a way to control behavioral disturbances in elderly dementia patients, children, and the mentally disabled.

The companies allegedly downplayed the serious health risks associated with Risperdal, including the risk of stroke in elderly patients, and even paid doctors to induce them to prescribe the drugs. As part of this scheme, the companies allegedly paid kickbacks to the nation’s largest long-term care pharmacy, whose pharmacists were supposed to be the gatekeepers to provide an independent review of patient medications. Instead, at the companies’ behest, the pharmacists allegedly recommended Risperdal for nursing home patients who exhibited behavioral symptoms associated with Alzheimer’s disease and dementia. The DOJ further alleged the conduct resulted in government health care programs paying millions of dollars in false claims for these drugs.

To resolve allegations stemming from the improper promotion of Risperdal, Janssen Pharmaceuticals will plead guilty to misbranding Risperdal, and will pay $400 million in criminal fines and forfeitures. Johnson & Johnson and Janssen Pharmaceuticals have further agreed to pay over $1.2 billion to resolve their civil liability under the False Claims Act (FCA). Johnson & Johnson will pay an additional $149 million to resolve claims relating to alleged kickbacks to a long-term care pharmacy.

In addition to these claims, the DOJ alleged that Johnson & Johnson and its subsidiary, Scios Incorporated, promoted the heart failure drug Natrecor for off-label uses that caused patients to submit to costly infusions of the drug—without credible scientific evidence that it would have any health benefit for those patients. In a separate matter that was resolved in 2009, Scios pleaded guilty to misbranding Natrecor and paid a criminal fine of $85 million. To resolve current allegations associated with the settlement announced today, the companies have agreed to pay an additional $184 million.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC. Published with permission.