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Johnson & Johnson has agreed to pay more than $2.2 billion to settle criminal and civil claims that it marketed the antipsychotic drug Risperdal and other medications for off-label uses and paid kickbacks to a large pharmacy, the Justice Department said Monday.
The agreement, one of the largest health care fraud settlements in history, largely centered on Risperdal, an antipsychotic drug that Johnson & Johnson marketed to treat elderly dementia patients, as well as children with behavioral problems. The civil settlement also resolved claims related to a similar antipsychotic drug, Invega, as well as heart medication Natrecor.
The pharmaceutical giant and subsidiaries agreed to pay $485 billion in criminal fines and forfeiture, and $1.72 billion in civil settlements with the federal government and states. The agreement also requires the company to change business practices related to drug marketing.
"These companies lined their pockets at the expense of American taxpayers, patients and the private insurance industry" as they drove up health care costs and hurt the solvency of health care programs such as Medicare, U.S. Attorney General Eric Holder said. "The settlement also addresses allegations of conduct that recklessly put at risk the health of some of the most vulnerable members of our society � including young children, the elderly and disabled."
Johnson & Johnson Vice President and General Counsel Michael Ullmann said in a statement: "This resolution allows us to move forward and continue to focus on delivering innovative solutions that improve and enhance the health and well-being of patients around the world."
Risperdal was approved by the Food and Drug Administration to treat schizophrenia. But in 2002 and 2003, sales representatives for Janssen Pharmaceuticals, a Johnson & Johnson subsidiary, urged physicians and others to prescribe the drug to treat symptoms such as agitation, hostility and confusion in elderly dementia patients, according to criminal charges. Sales materials emphasized such symptoms and downplayed any mention of the FDA-approved use. Company representatives received incentives for promoting the drug's off-label uses, according to the criminal charges.
Under a criminal plea, Janssen will pay a total of $400 million to settle the claims and plead guilty to a misdemeanor misbranding charge.
In a related civil complaint, Justice says Janssen marketed Risperdal to control the behavior of elderly nursing home patients, children and people with mental disabilities. The company made "false and misleading statements" about Risperdal's benefits and minimized the risks.
The government says it repeatedly warned Janssen that marketing Risperdal as safe and effective would be misleading and that the drug posed an increased risk of stroke, among other "serious health risks" for the elderly. The company also downplayed or failed to publish studies that confirmed the dangers of the drug, Justice said.
From 1999 to 2005, despite the FDA's repeated warnings, Janssen created an "ElderCare sales force" that targeted nursing homes and doctors who treated the elderly in a campaign to promote off-label uses.
During that period, the company also told its sales force to market Risperdal to child psychiatrists and others to treat children with illnesses such as attention deficit disorder, obsessive-compulsive disorder and autism. Risperdal increased the risk in children of elevated levels of a hormone that can stimulate breast development, among other side effects, the government charges.
The settlement also resolves allegations that Janssen marketed Invega, another drug to treat schizophrenia, for off-label uses.
Johnson & Johnson and Janssen allegedly paid millions of dollars in kickbacks to Omnicare, the nation's largest pharmacy, which caters to nursing homes, to induce it to promote Risperdal and other drugs in the facilities. Janssen also allegedly paid doctors "speaker fees" to coax them to prescribe Risperdal.
Under the agreement, the companies have agreed to pay a total of $1.39 billion to resolve claims related to off-label marketing and kickbacks for Risperdal and Invega.
The settlement also resolves claims that Johnson & Johnson and another subsidiary, Scios, improperly marketed Natrecor, which was approved to treat an acute form of congestive heart failure. Instead, Scios launched an aggressive campaign to persuade doctors and clinics to use the drug to treat less severe heart failure.
"This case is an example of a drug company encouraging doctors to use a drug in a way that was unsupported by valid scientific evidence," said Brian Stretch, first assistant U.S. attorney for the Northern District of California.
The settlement will require J&J to abide by a five-year corporate integrity agreement. Under one provision, the company will have to change its bonus program to allow for recouping payments made to executives found to have engaged in misconduct. J&J will also have to be more transparent about research, publication policies and payments to physicians.