Johnson & Johnson Reaches $2.2 Billion Health Care Fraud Settlement

December 10, 2013 — The U.S. Department of Justice relies on whistleblowers to stop pharmaceutical companies from causing the submission of false claims to Medicare and Medicaid by promoting drugs for off-label uses that are not reimbursable by federal healthcare programs. The qui tam provisions in the federal False Claims Act give inside employees working for drug manufacturers the tools they need to thwart False Claims Act violations. In exchange for filing a claim on behalf of the federal and state governments, informants are rewarded with a share of any proceeds from the lawsuit.

Johnson & Johnson Settles Multiple False Claims Act Lawsuits

Johnson & Johnson (J&J) and the health care giant’s subsidiaries have agreed to pay over $2.2 billion to settle criminal and civil liability in connection with the prescription medications Risperdal, Natrecor and Invega. The government has alleged that J&J promoted its pharmaceuticals for uses unapproved by the Food and Drug Administration (FDA) and that the drug maker paid kickbacks to doctors and to the biggest long-term care pharmacy provider in the country.

The settlement of multiple health care fraud charges against J&J is one of the largest in history, including forfeiture and criminal fines totaling $485 million and civil settlements with state and federal governments adding up to $1.72 billion. The civil settlements resolve a number of whistleblower lawsuits brought to stop J&J from further violations of the False Claims Act.

  • Whistleblowers in Pennsylvania will receive $112 million;
  • Massachusetts whistleblowers will take a $27.7 million share; and
  • One California whistleblower will receive $28 million.

J&J and Janssen Resolve False Claims Act Allegations That J&J Targeted Elderly Patients With Claims That Risperdal and Invega Were Effective For Off-Label Uses

According to the Justice Department, Janssen Pharmaceuticals Inc. — a J&J subsidiary — marketed Risperdal, an anti-psychotic drug, for use to manage the behavior of elderly nursing home residents, people with mental disabilities and children. Because this use was not approved by the FDA, J&J and Janssen allegedly caused the submission of false claims to federal healthcare programs for reimbursement for drugs not covered by the programs. In addition, the companies made false and misleading statements concerning Risperdal’s safety and efficacy. Further, the pharmaceutical companies allegedly paid kickbacks to doctors who prescribed Risperdal for off-label uses.

The FDA repeatedly warned Janssen that it would be misleading to promote Risperdal as effective for elderly patients. Behavioral upsets in elderly dementia patients, advised the FDA, do not necessarily suggest psychotic disorders and may even be rational responses to the living conditions in some nursing homes. Janssen and J&J knew from studies that Risperdal could cause stroke and other health risks in the elderly, but the companies combined such data with other studies so the overall risk seemed lower. In addition, Janssen allegedly knew that Risperdal carried the same risk for causing diabetes as other antipsychotics, but hired consultants to rework the data and publish studies claiming that in fact Risperdal was associated with a lower diabetes risk. Between 1999 and 2005, despite the increased health risks and FDA warnings, Janssen aggressively promoted Risperdal to control behavioral outbursts in dementia patients. Using an “ElderCare sales force,” Janssen targeted doctors and nursing homes to maximize  the company’s profits in the geriatric and long-term care sector.

During the same time period, Janssen allegedly marketed Risperdal for use in people with mental disabilities and in children. J&J and Janssen allegedly were aware that Risperdal could cause elevated levels of prolactin in children. Still, Janssen directed its sales force to pursue child psychiatrists and mental health facilities for children to market the drug for treatment of:

  • attention deficit hyperactivity disorder,
  • autism,
  • oppositional defiant disorder, and
  • obsessive-compulsive disorder.

Yet it was not until 2006 that the FDA approved Risperdal for use in children for any reason. In fact, the FDA warned Janssen several times not to promote the drug for use in children.

The government also alleged that Janssen enticed physicians to write prescriptions for Risperdal by paying them speaker fees. If the physicians wanted the fees, Janssen sales representatives allegedly told them, they should write more Risperdal prescriptions.

Global Settlement and Invega

The government’s global settlement with J&J and Janssen also covered allegations concerning Invega, one of Janssen’s newer antipsychotic medications which the FDA approved only for schizophrenia and schizoaffective disorder. According to the Justice Department, between 2006 and 2009, Janssen and J&J promoted Invega for off-label uses and made false and misleading claims about the drug’s efficacy and safety.

J&J and Janssen have consented to settle the False Claims Act allegations concerning Risperdal and Invega for a total of $1.391 billion. Of that amount, $118 million was already paid in March 2012 by J&J and Janssen to the state of Texas to settle similar allegations in connection with Risperdal and false claims made to Medicaid. Texas and the federal government each received $59 million from the earlier settlement. Since Medicaid is jointly funded by the federal government and by the states, J&J’s conduct resulted in losses by the federal and state governments. The more recent settlement will be apportioned, with $749 million going to the federal government and $524 million going to the states.

J&J and Janssen Resolve Numerous Other Health Care Fraud Allegations

In making this settlement, Janssen admitted that it marketed Risperdal to health care providers to treat behavioral disturbances in elderly patients, an unapproved use. As part of its plea agreement, Janssen will pay a criminal penalty of $334 million and will forfeit $66 million. J&J and Janssen will also pay $149 million to settle the government’s allegations that the companies paid kickbacks to Omnicare Inc., the country’s largest pharmacy dispensing pharmaceuticals to nursing home patients. The global settlement also covers allegations that J&J and Scios, Inc., another of its subsidiaries, caused false claims to be filed with federal healthcare programs for Natrecor, a heart failure medication that the drug makers promoted for the off-label use of serial outpatient infusions for patients suffering less severe heart failure. J&J and Scios consented to pay $184 million to settle their civil liability as a result of that off-label marketing.

Pharmaceutical Company Employees on the Front Lines Fighting Medicare Fraud

False Claims Act violations like those exposed here involving J&J and Janssen often come to light when whistleblower employees collaborate with the government. The qui tam attorneys with Waters & Kraus were on the front lines in the Texas case involving Risperdal. Our whistleblower lawyers have a proven track record providing knowledgeable and sensitive legal counsel with results for courageous informants. Contact us by email or call our False Claims Act lawyers at 855.784.0268 to learn more about filing a whistleblower lawsuit.

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