Biggest Settlement By Johnson & Johnson (NYSE:JNJ) In Healthcare Fraud
Johnson & Johnson (NYSE:JNJ) will be paying $2.2 billion in one of the United States’ largest health care fraud settlements. Its subsidiary, Janssen Pharmaceuticals Inc. will plead guilty to a single violation for the promotion of Risperdal, under the settlement. The resolution of this case covers long running investigations related to kickbacks and marketing of anti-psychotic drugs Risperdal and Invega as well as the heart drug Natrecor, for off-label uses.
For more than half a decade during 1999 to 2005 Johnson & Johnson and Janssen Pharmaceuticals promoted Risperdal for off-label, unapproved uses including treatment of behavioral disturbances in children, in individual with disabilities and controlling anxiety and aggression in elderly dementia patients. The complaint mentioned that this off-label marketing cost U.S. insurance programs hundreds of million in uncovered claims. The company paid to Omnicare Inc. (NYSE:OCR) millions of dollars under various pretexts including ‘educational funding’, for kickbacks. Omnicare is the nation’s largest pharmacy providing pharmaceuticals and related ancillary services to long term care facilities and other settings.
The U.S. Attorney General Eric Holder commented that Johnson & Johnson (NYSE:JNJ)’s conduct put the health of children and dementia patients as well as others to whom the drug was prescribed, at risk. Janssen Pharmaceuticals’ sales representatives aggressively promoted Risperdal to doctors as well as other prescribers and the nursing home operators through special Eldercare sales force. At that time the drug was approved only to treat schizophrenia, by the U.S. Food and Drug Administration. The FDA clarified that it had repeatedly warned Janssen about misleading marketing messages to prescribers and later initiated a criminal complaint.
Yesterday’s settlement did also resolve the allegations related to marketing to promote off-label use of Natrecor, not approved by the USFDA and not even covered by federal healthcare programs. The allegations were against the Johnson & Johnson and its subsidiary, Scios Inc.
The company reported that no additional charges would be accorded to earnings in regard with this settlement.