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J&J fined $2.2 bn for faulty drug claims, kickbacks

Johnson's Baby Shampoo is pictured on display at a supermarket in Hong Kong on March 16, 2009
Johnson's Baby Shampoo is pictured on display at a supermarket in Hong Kong on March 16, 2009

Global health-care giant Johnson & Johnson will pay more than $2.2 billion to settle allegations that it fraudulently promoted drugs and used kickbacks to promote their sales, the Justice Department said Monday.

In one of the largest health-care fraud settlements in US history, J&J's criminal and civil fine covers allegations the company marketed Risperdal and other prescription drugs for uses not approved as safe and effective by the Food and Drug Administration (FDA), the department said.

The settlement further covers kickbacks J&J allegedly paid to physicians and pharmacies for prescribing and promoting those drugs.

The actions resulted in millions of dollars paid under Medicaid, the government health-insurance program for low-income and disabled people, causing losses to both the federal and state governments.

"This global settlement resolves multiple investigations involving the antipsychotic drugs Risperdal and Invega -- as well as the heart drug Natrecor and other Johnson & Johnson products," Attorney General Eric Holder said in a statement.

"The settlement also addresses allegations of conduct that recklessly put at risk the health of some of the most vulnerable members of our society -- including young children, the elderly, and the disabled."

J&J is to pay $485 million in criminal fines and forfeiture and a total of $1.72 billion in civil settlements with the federal government and states.

J&J unit Janssen Pharmaceuticals admitted it had promoted Risperdal for unapproved treatment of elderly dementia patients and will pay a total of $400 million, including a criminal fine of $334 million and forfeiture of $66 million. Janssen's guilty plea requires approval by the US district court.

In separately filed civil complaints, the government alleged that J&J and Janssen promoted Risperdal and Invega, a newer antipsychotic drug, to doctors -- and to nursing homes -- as a way to control behavioral disturbances in elderly dementia patients, children, and the mentally disabled.

The civil settlement also resolves allegations that J&J and Janssen paid kickbacks to Omnicare, the nation's largest pharmacy specializing in dispensing drugs to nursing home patients.

In 2009, Omnicare paid $98 million to resolve its civil liability for claims that it accepted kickbacks from J&J and Janssen.

In addition, the civil settlement announced Monday resolved allegations that J&J and another subsidiary, Scios, caused false claims to be submitted to federal health care programs for the heart failure drug Natrecor.

Scios allegedly marketed the drug for off-label uses. Intended for patients with severe heart failure, it was given to patients with less severe heart issues over weeks and months.

As part of the global settlement, J&J must undertake a major overhaul of its pharmaceutical business over five years supervised by the Health and Human Services inspector general.

The New Brunswick, New Jersey-based company said in a statement that it had cooperated with the government since the separate investigations began nearly a decade ago.

"Today's agreements resolve all related federal criminal and federal civil liabilities on these matters," the company said.

"The settlement of the civil allegations is not an admission of any liability or wrongdoing, and the company expressly denies the government's civil allegations."

Shares in Dow member J&J were down 0.9 percent at $92.58 in midday trading. Omnicare shares rose 0.5 percent at $55.47.

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