J&J To Pay $2.2 Bln To Resolve Allegations Of Off-label Marketing, Kickbacks

(RTTNews) - Johnson & Johnson Co.'s (JNJ) subsidiary Janssen Pharmaceuticals Inc. has agreed to plead guilty and pay $1.67 billion to resolve allegations of misbranding and filing false claims for its schizophrenia drug Risperdal under a criminal plea and civil settlement agreement.

Risperdal was approved by the FDA for the treatment of schizophrenia in 2002 and for the short-term treatment of acute mania and for mixed episodes associated with Bipolar 1 Disorder in 2003. However, from March 3, 2002 through Dec. 31, 2003, the company marketed the drug for an unapproved indication namely as a treatment for agitation associated with dementia in the elderly thereby violating the law as it introduced a misbranded drug into interstate commerce.

In a plea agreement resolving the charge of introducing a misbranded drug, Janssen will admit to wrongdoing and pay a total of $400 million, including a criminal fine of $334 million and forfeiture of $66 million.

The civil allegations against J&J and Janssen relating to Risperdal include promoting the drug for off-label uses that federal health care programs did not cover, making false and misleading statements about the safety and efficacy of Risperdal and paying kickbacks to physicians to prescribe Risperdal. Janssen also allegedly promoted the drug for use in children and individuals with mental disabilities from 1999 through 2005 even though it was not approved for use in children for any purpose then.

J&J will shell out $1.25 billion to settle the civil allegations concerning the antipsychotic drug.

The combined criminal plea and civil settlement agreement related to Risperdal totals more than $1.67 billion.

Risperdal logged in sales of $1.43 billion in 2012 compared to $1.58 billion in 2011.

In addition to allegations relating to Risperdal, a settlement has also been reached to resolve allegations of off-label promotion relating to Invega, a newer antipsychotic drug also sold by Janssen, and a heart failure drug Natrecor, sold by Scios Inc., another subsidiary of J&J.

J&J and Janssen marketed Invega from 2006 through 2009 for off-label indications and made false and misleading statements about its safety and efficacy.

Shortly after getting approval in August 2001 for Natrecor to treat patients with acutely decompensated congestive heart failure who have shortness of breath at rest or with minimal activity, Scios also marketed the drug for an unapproved indication and not covered by federal health care programs namely for scheduled, serial outpatient infusions for patients with less severe heart failure.

The amount of fine required by J&J and its subsidiaries to resolve criminal and civil liability arising from allegations relating to all the three prescription drugs Risperdal, Invega and Natrecor totals more than $2.2 billion.

According to the Department of Justice, the $2.2 billion global resolution is one of the largest health care fraud settlements in U.S. history.

JNJ closed Monday's trading at $93.03, down 0.36. In after-hours, the stock shed another 0.03% to $93.