Johnson & Johnson, 2 Units Plead Guilty, Pay $2.2 Billion In Criminal, Civil Penalties

WASHINGTON, D.C. — (Mealey’s) Two Johnson & Johnson subsidiaries have pleaded guilty, and the parent company and two subsidiaries will pay $2.2 billion in criminal fines, civil penalties and forfeitures in one criminal and several civil cases for off-label marketing of three drugs, for paying kickbacks to health care providers and a nationwide pharmacy and for causing false claims to be submitted to Medicare and Medicaid, the U.S. Justice Department announced Nov. 4. 

Johnson & Johnson also entered into a five-year corporate integrity agreement under which it will take back bonuses from current and former executives who engage in “significant misconduct,” the Justice Department said. 

Risperdal Criminal Case

 Janssen Pharmaceuticals Inc. pleaded guilty to one count of misbranding the antipsychotic drug Risperdal.  The criminal complaint, which was filed Nov. 4 in the U.S. District Court for the Eastern District of Pennsylvania, alleges that from March 3, 2002, through Dec. 31, 2003, Janssen marketed Risperdal to treat elderly dementia patients for anxiety, agitation, depression, hostility and confusion, uses for which the drug was not approved (United States of America v. Janssen Pharmaceuticals, Inc., No. 13-cr-605, E.D. Pa.). 

(Risperdal criminal agreement available.  Document #28-131107-012P.) 

The criminal information says Janssen provided incentives for off-label sales of Risperdal by basing the bonuses of sales representatives on all sales of the drug, including off-label prescriptions. 

Under its criminal plea agreement, Janssen will pay a $334 million criminal fine and forfeit $66 million. 

Risperdal Civil Settlement 

Separately, Janssen agreed to settle four False Claims Act complaints in which the federal government filed an intervention complaint on Nov. 4 (United States of America, ex rel. Victoria Starr v. Janssen Pharmaceutica Prod., L.P., No. 04-1529, United States of America, ex rel. Lynn Powell v. Janssen Pharmaceutica Prod., L.P., No. 04-5184, United States of America, ex rel. Camile McGowan and Judy Doetterl v. Janssen Pharmaceutica, Inc., et al., No. 05-4536, and United States of America, ex rel. Kurtis J. Barry v. Ortho-McNeil-Janssen Pharms., Inc., et al., No. 10-98, E.D. Pa.). 

(Risperdal civil settlement available.  Document #28-131107-013P.) 

Under the civil settlement, Johnson & Johnson and Janssen agreed to pay $1.27 billion.  The federal government will take $749 million, and $524 million will be used to reimburse state Medicaid programs. 

Relators Victoria Starr, Lynn Powell, Camile McGowan, Judy Doetterl and Kurtis J. Barry will share $112 million as their statutory share of the recovery. 

Elderly, Children Targeted 

In its complaint, the federal government alleged that Janssen’s off-label marketing of Risperdal to elderly nursing home residents, to children and to patients with mental disabilities caused false claims to be submitted to federal health care programs.  It alleges that Janssen made false and misleading statements about the safety and efficacy of Risperdal and paid kickbacks to physicians to write prescriptions for off-label uses. 

The government says the Food and Drug Administration “repeatedly” told Janssen that it was misleading to market Risperdal as safe and effective for the elderly.  It also says Janssen and Johnson & Johnson were aware that Risperdal posed serious health risks to the elderly, such as strokes, but downplayed the risks. 

When a Johnson & Johnson study showed Risperdal had a significant risk of stroke, the government says, it combined the data with other studies to make the risk appear lower.  

Diabetes Risk Downplayed 

The government also alleges that Janssen knew that Risperdal carried a risk of causing diabetes but promoted it as not doing so.  When a study found that Risperdal posed the same diabetes risk as other atypical antipsychotic drugs, the government says Janssen hired an outside consultant to re-analyze the study results and publish articles stating that the drug had a lower risk of diabetes. 

In addition, the government alleges that from 1999 to 2005, Janssen promoted Risperdal for use in children and patients with mental disability.  It says Janssen and Johnson & Johnson knew that Risperdal carried a risk of elevating prolactin, a hormone that stimulates breast development and human milk production. 

The FDA also repeatedly warned Janssen against promoting Risperdal for use in children, the government says. 

In addition, the government alleges that Janssen paid speaker fees to doctors to influence them to write Risperdal prescriptions.  It said company sales representatives were told to tell doctors that if they wanted the speaker fees, they had to increase their Risperdal prescriptions. 

Invega Civil Settlement 

Janssen also agreed to resolve allegations that from 2006 to 2009, it marketed Invega, a new antipsychotic drug for off-label uses, and made misleading statements about its safety and efficacy. 

Johnson & Johnson and Janssen also agreed to a civil settlement of a 2010 False Claims Act lawsuit filed in the U.S. District Court for the District of Massachusetts (United States of America, ex rel. Bernard Lisitza v. Pfizer Inc., et al., No. 07-10288, D. Mass.).  That case alleges that Johnson & Johnson paid kickbacks in the form of market share rebate payments, data-purchase agreements, grants and educational funding to Omnicare, a nationwide pharmacy serving nursing homes in return for Omnicare promoting Risperdal and other Johnson & Johnson drugs. 

(Massachusetts settlement agreement available.  Document #28-131107-014P.) 

Johnson & Johnson and Janssen will pay $149 million to resolve the Massachusetts false claims lawsuit.  The federal government will take $132 million, and the states will take $17 million. 

Relator Bernard Lisitza will receive $27.2 million as his statutory share of the recovery. 

Natrecor Civil Settlement 

Johnson & Johnson subsidiary Scios Inc. also agreed to settle a 2009 False Claims Act lawsuit alleging that Scios marketed the heart failure drug Natrecor for off-label use in non-hospital settings (United States of America, ex rel. Joe Strom v. Scios, Inc., et al., No. 05-3004, N.D. Calif.).  Natrecor was approved to treat patients with acutely decompensated congestive heart failure who have shortness of breath while at rest or with minimal activity. 

(Scios civil settlement agreement available.  Document #28-131107-015P.) 

The complaint alleges that Scios marketed Natrecor for use in patients with less-severe heart failure in outpatient clinics or doctors’ offices.  It says Scios used a small pilot study to encourage off-label use of Natrecor, sponsored a speaker program for doctors to promote the use, encouraged hospitals to set up outpatient clinics and, in some cases, defrayed the cost of doing the latter. 

Johnson & Johnson and Scios will pay $184 million to resolve the Natrecor false claims allegations.  

Relator Joe Strom will receive $28 million as his statutory share of the recovery. 

Bonus Take-Back 

The Justice Department said the corporate integrity agreement requires Johnson & Johnson to recoup bonuses and other long-term incentives from certain executives if they or their subordinates engaged in significant misconduct.  Repayment can be sought for current or former employees. 

(Corporate integrity agreement available.  Document #28-131107-016P.) 

In 2012, Johnson & Johnson announced it was taking a $600 million charge against earnings and had agreed in principal to settle False Claims Act lawsuits involving Risperdal, Invega, Natrecor and Omnicare. 

In a Nov. 4 press release, Johnson & Johnson said it “accepts accountability for the actions described in the misdemeanor plea” but said the civil settlements are not an admission of liability or wrongdoing.  It said it expressly denies the civil allegations. 

Counsel 

In the Risperdal criminal case, the government is represented by U.S. Attorney Zane D. Memeger and Assistant U.S. Attorneys Peter F. Schenck, Richard A. Lloret and Albert S. Glenn of the U.S. Attorney’s Office in Philadelphia and Assistant Attorney General Stuart F. Delery and Michael S. Blume, Jill Furman, Perham Gorji and Kevin J. Larsen of the U.S. Justice Department in Washington, D.C.  Johnson & Johnson and Janssen are represented in both the criminal and civil Risperdal cases by Christopher A. Wray, Mark A. Jensen and Brandt Leibe of King & Spalding in Washington, Richard L. Scheff of Montgomery, McCracken, Walker & Rhoads in Philadelphia and Theodore V. Wells Jr. of Paul, Weiss, Rifkind, Wharton & Garrison in New York. 

In the Risperdal civil cases, the government is represented by Louis D. Lappen, Margaret L. Hutchinson, Mary Catherine Frye, Charlene Keller Fullmer and Meminger of the U.S. Attorney’s Office in Philadelphia and Michael D. Granston, Jamie Ann Yavelberg, Jennifer L. Cihon, Edward C. Crooke and Delery of the Justice Department in Washington. 

Starr is represented by Michael Mustokoff of Duane Morris in Philadelphia, Stephen A. Sheller of Sheller PC in Philadelphia and Gary. M. Farmer Jr. of Farmer, Jaffe, Weissing, Edwards, Fistos & Lehrman in Fort Lauderdale, Fla.  Powell is represented by John Thurman of Farrell & Thurman in Skillman, N.J. 

McGowan and Doetterl are represented by Daniel Oliverio of Hodgson Russ in Buffalo, N.Y.  Barry is represented by Thomas W. Sheridan of Sheridan & Murray in Philadelphia. 

Additional Counsel 

In the Massachusetts false claims lawsuit, the government is represented by U.S. Attorney Carmen Ortiz and Assistant U.S. Attorneys Greg Shapiro and George B. Henderson of the U.S. Attorney’s Office in Boston, Robert K. DeContin of the U.S. Department of Health and Human Services in Washington and Delery of the Justice Department. 

Johnson & Johnson and Janssen are represented in the Massachusetts settlement by William Sarraille of Sidley Austin in Washington and Mark D. Seltzer of Nixon Peabody in Boston. 

Lisitza is represented by Michael Behn and Linda Wyetzner of Behn & Wyetzner in Evanston, Ill. 

In the Scios civil case, the government is represented by U.S. Attorney Joshua B. Eaton and Assistant U.S. Attorneys Sara Winslow and Thomas R. Green of the U.S. Attorney’s Office in San Francisco and Michael D. Granston, James Ann Yavelberg, Renee S. Orleans, Kimberly I. Friday and Delery of the Justice Department in Washington.  Scios is represented by John M. Potter of Quinn, Emanuel, Urquhart & Sullivan in San Francisco. 

Strom is represented by Marcella Auerbach of Nolan, Auerbach & White in Fort Lauderdale. 

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