Johnson & Johnson agrees to pay $2.2 billion in drug-marketing settlement

Video: Johnson & Johnson and its subsidiaries have agreed to pay over $2.2 billion to resolve criminal and civil allegations.

Johnson & Johnson will pay $2.2 billion to resolve civil and criminal allegations involving the marketing of off-label, unapproved uses for three prescription drugs, Justice Department officials announced Monday.

The cases, which date from the late 1990s through the early 2000s, involve alleged kickbacks to doctors and pharmacies to promote the antipsychotic drugs Risperdal and Invega, and a heart drug, Natrecor. The widely anticipated agreement was one of the largest health-care fraud settlements in U.S. history.

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Federal investigators accused a Johnson & Johnson subsidiary of promoting Risperdal for controlling anxiety and aggression in elderly dementia patients, as well as for treating behavioral problems in other “vulnerable” populations, such as children and the mentally disabled, even though the Food and Drug Administration initially approved the drug only for schizophrenia. Officials said the company also promoted off-label uses for Invega and “made false and misleading statements about its safety and efficacy.”

In addition, Justice officials said another Johnson & Johnson subsidiary undertook an “aggressive campaign” to market Natrecor for some patients with less severe heart disease than the drug was designed to treat.

Monday’s settlement included criminal fines and forfeited profits of about $485 million, as well as civil payments to the federal government and various states totaling more than $1.7 billion, the Justice Department said.

“The conduct at issue in this case jeopardized the health and safety of patients and damaged the public trust,” Attorney General Eric H. Holder Jr. said in announcing the settlement. “This multibillion-dollar resolution demonstrates the Justice Department’s firm commitment to preventing and combating all forms of health-care fraud. And it proves our determination to hold accountable any corporation that breaks the law and enriches its bottom line at the expense of the American people.”

The deal also marked the latest in a string of high-profile fraud settlements that the government has sought against the pharmaceutical industry in recent years. The Justice Department said it has recovered nearly $17 billion since 2009 by bringing cases under the False Claims Act, with about $12 billion of that involving fraud against federal health-care programs.

In the largest settlement, British drug manufacturer GlaxoSmithKline agreed last year to plead guilty to criminal charges and pay $3 billion in fines for improperly marketing numerous drugs and not reporting safety data about a diabetes medication.

Federal law forbids companies from marketing drugs for uses other than those specifically approved by the FDA, although doctors may prescribe drugs for such off-label uses.

“When pharmaceutical companies interfere with FDA’s mission of ensuring that drugs are safe and effective for the American public, they undermine the doctor-patient relationship and put the health and safety of patients at risk,” John Roth, director of the FDA’s Office of Criminal Investigations, said Monday in a statement. “Today’s settlement demonstrates the government’s continued focus on pharmaceutical companies that put profits ahead of the public health.”

In addition to the monetary penalties, Johnson & Johnson entered a five-year agreement with the government, requiring the company to change its executive compensation program so it can recoup money from employees who engage in misconduct. The agreement requires the company to submit detailed reports to federal officials about its business operations and any payments to physicians.

Associate Attorney General Tony West said such nonmonetary provisions are an effort “to change corporate behavior” rather than to merely impose fines. “In addition to accountability,” West said, “we are looking for deterrents.”

Johnson & Johnson said it had cooperated with government investigators during years of inquiries about the various allegations. The company said one of its subsidiaries will plead guilty to a misdemeanor violation of the federal Food, Drug and Cosmetic Act for the way it promoted Risperdal. But despite the hefty settlement, Johnson & Johnson said it “expressly denies the government’s civil allegations.” The company also said that it had previously accrued the settlement amounts, and that no other charge to earnings would be recorded.

“Today we reached closure on complex legal matters spanning almost a decade,” Johnson & Johnson 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.”

Monday’s settlement also will result in a significant payout for whistleblowers in three states — Pennsylvania, Massachusetts and California — who officials said will receive nearly $168 million of the government’s take.

Sari Horwitz contributed to this report.

 
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