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Johnson & Johnson Said it's Near Risperdal Settlement with Feds, State

Aug 3, 2012 | Parker Waichman LLP

Johnson & Johnson has indicated that it has reached a settlement deal, in principle, with the U.S. Justice Department over charges it illegally marketed its anti-psychotic drug Risperdal.

The two sides had been negotiating settlement terms over these charges and the Justice Dept. has previously rejected an offer from Johnson & Johnson to pay about $1 billion to cover the charges. Bloomberg News is reporting the settlement terms would likely have the pharmaceutical company pay $2.2 billion as part of the deal. Full details on the settlement have not been finalized and therefore this news may be a bit premature.

The settlement is also likely to cover similar charges against Johnson & Johnson’s subsidiary, Janssen Pharmaceuticals, that it illegally marketed the drugs Invega and Natrecor.

Johnson & Johnson was under investigation by federal authorities who suspected the company was promoting its popular anti-pscyhotic drug Risperdal for indications other than what it was approved to treat.

It offered kickback incentives to several companies, including nursing home networks, to dispense Risperdal for other indications than the FDA approved it to treat. State governments eventually were made aware of these deals and along with Risperdal’s premium cost, they realized they were being billed through Medicaid-eligible patients for drug’s that were serving no clinical benefit and actually putting patients at greater risk of injury or death.

One company, Omnicare Inc., took J&J and Janssen’s bribe offer and began allowing physicians to prescribe Risperdal to residents at nursing homes who were suffering from dementia and Alzheimer’s disease. Neither of these conditions falls under Risperdal’s range of care, but the increased prescriptions resulted in a boost in sales for the pharmaceutical firms.

To further convince those on the receiving end of the offers, the companies offered false evidence from trials that showed Risperdal was clinically more effective than other similar drugs. Not only does Risperdal carry little clinical benefit over other drugs, patients prescribed the drug have often shown to be more prone serious and life-threatening side effects. Risperdal increases a person’s risk of suffering a stroke and ups the risk of developing diabetes by 50 percent.

The companies have already paid billions of dollars to settle other claims that it presented misleading data and used that evidence to boost sales through state Medicaid programs. The Justice Dept. is backed by more than half of all state governments looking to recover funds they paid for unnecessary Risperdal prescriptions. 

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