Posted 04 November 2013
By Alexander Gaffney, RF News Editor
The US Department of Justice (DOJ) has announced that Johnson & Johnson will pay at least $2.2 billion to resolve claims that it improperly marketed three drugs for indications not approved by the US Food and Drug Administration (FDA). The amount, which includes fines, forfeitures and settlement fees, amounts to one of the largest healthcare-related civil settlements in US history.
The settlement between J&J and DOJ has long been in the works.
In June 2012, Bloomberg and Reuters bothreported that the company was in the final stages of approving the $2.2 billion settlement. DOJ officials had earlier rejected a $1 billion offer by the company, claiming it was inadequate given the size and scope of the company's alleged improprieties.
The charges originate from a US investigation into whether Johnson & Johnson subsidiary Janssen marketed Risperdal, an antipsychotic, for off-label uses and used labeling that downplayed the risks of the product.
The 1993 approval for Risperdal was for a narrow range of psychotic disorders, but the US government alleged Janssen sought to increase its profitability to marketing it as a treatment for numerous other unapproved uses including bipolar disorder and dementia. They similarly alleged that the company failed to update its labeling promptly enough to reflect new risks, and that marketing materials downplayed those risks as well.
Under US law, the company could have been liable for massive damages based on the theory that if a doctor prescribes a drug under a health program paid for by federal dollars, it constitutes fraud against the government if the company had marketed it for that unapproved condition.
J&J may have had good reason to settle. In April 2012, the company was hit with a $1.2 billion judgment in Arkansas over the marketing of Risperdal, again for "unapproved uses, including various symptoms in children and the elderly." The size and scope of a federal judgment could have been substantially more painful.
Though at least one prominent legal group, the Washington Legal Foundation (WLF), has come to the company's defense, the costs of not settling may have simply proven too high to ignore.
DOJ Settlement Announced
In an announcement on 4 November 2013, DOJ officials said J&J's alleged conduct had served to both defraud the government and put consumers at risk.
"The conduct at issue in this case jeopardized the health and safety of patients and damaged the public trust," said Attorney General Eric Holder. "This multibillion-dollar resolution […] 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 settlement will include $485 million in criminal fines and forfeiture, as well as a $1.72 billion settlement with the US government and various states. J&J will also be subject to a Corporate Integrity Agreement (CIA) between it and the US Department of Health and Human Services' (DHHS) Office of the Inspector General (OIG).
The CIA contains components to allow J&J to claw back bonuses paid to executives who are found to have engaged in significant misconduct, new transparency policies regarding payments to physicians, and new certification requirements to ensure compliance with the CIA's conditions at the highest levels of the company.
The settlement also contains allegations related to Invega, another antipsychotic that was subject to similar off-label marketing and downplayed safety concerns, kickbacks paid to Omnicare Inc. purportedly intended to increase their market share for Risperdal, and the off-label marketing of a congestive heart failure drug Natrecor for less severe heart failure conditions.
The fine is among the largest in history. Only a $3 billion settlement by GlaxoSmithKline in 2012 and a $2.3 billion settlement by Pfizer in 2009 are larger.
DOJ's Press Release