Thursday, December 12, 2013
SAC and J&J wrongdoing stories
The deal resolves probes that prosecutors had pursued for nearly a decade into allegations that J&J had promoted drugs in the late 1990s and early 2000s for unapproved and sometimes harmful uses. The settlement ends years of often-difficult negotiations that at one point even pitted prosecutors in Washington, D.C., against federal prosecutors in Philadelphia.
J&J 'displayed a reckless indifference to the safety of the American people,' Attorney General Eric Holder said at a news conference on Monday. Associated Press
Prosecutors accused J&J of encouraging Risperdal's use in elderly nursing-home patients suffering from dementia, even though such a use wasn't approved by health regulators and could prove life-threatening. The company was also accused of marketing Risperdal to certain boys, despite a risk it could stimulate development of breasts.
J&J "displayed a reckless indifference to the safety of the American people," U.S. Attorney General Eric Holder said at a news conference on Monday announcing the settlement. "And it constitutes a clear abuse of the public trust, showing a blatant disregard for systems and laws designed to protect public health."
J&J, of New Brunswick, N.J., said it had already set aside funds to cover the full cost of the settlement, and it had already paid out $200 million of the $2.2 billion as part of agreements reached in previous years. The company disputed many of the government's claims and said its settlement of civil allegations wasn't an admission of wrongdoing or liability.
"We do not agree with all of the government's allegations and strongly believe some of them are not supported by the facts," J&J general counsel Michael Ullmann wrote to employees. The company settled, he said, "because it resolves complex and lengthy legal matters, allowing us to continue focusing our full attention on delivering innovative health-care solutions for patients and their families."
Under the terms of the settlement announced Monday, J&J's payment included a criminal fine of $334 million and forfeiture of $66 million. The company pleaded guilty to introducing a misbranded drug into interstate commerce, a plea that preserves J&J's ability to sell its products to Medicare and other government health programs.
The settlement would also resolve investigations into the promotion of Invega, another schizophrenia agent like Risperdal, and the heart-failure drug Natrecor.
The company also agreed to upgrade its compliance practices and submit to five years of monitoring by the Department of Health and Human Services' Office of Inspector General.
The J&J deal is among the biggest reached between the Justice Department and a pharmaceutical company accused of promoting medicines in ways that lead to unnecessary spending by government health programs. Federal and state prosecutors have been pursuing the cases for several years, aided by company whistleblowers.
Last year, GlaxoSmithKline PLC agreed to pay $3 billion and plead guilty to criminal charges involving the antidepressants Paxil and Wellbutrin and the diabetes drug Avandia. In 2009, Pfizer Inc. agreed to pay $2.3 billion to resolve a drug-promotion criminal investigation.
Under federal law, drug makers can market medicines only for uses approved by the U.S. Food and Drug Administration, though doctors can prescribe drugs for unapproved, or off-label, uses.
Risperdal is a pill treating the symptoms of mental illnesses such as schizophrenia, bipolar mania and irritability in autistic patients. The medicine had been J&J's top-selling drug with $2.2 billion in sales in 2007, the year before it lost U.S. patent protection.
Prosecutors alleged that J&J's Janssen Pharmaceuticals unit promoted Risperdal to elderly patients suffering from dementia, despite no approval for that use. Prosecutors also alleged that J&J's "ElderCare" sales force pushed Risperdal for use in these elderly patients, and sales representatives' bonus awards failed to distinguish prescriptions for schizophrenia or the unapproved dementia use.
In 2005, the FDA required the label warn that elderly patients suffering from dementia-related psychosis were at a higher risk of death.
Prosecutors also alleged that J&J promoted Risperdal for use by boys suffering from mental disabilities despite knowing that use could raise levels of a hormone stimulating breast development.
J&J faces more than 160 personal-injury lawsuits in state courts in Philadelphia filed by users of Risperdal alleging it caused their breasts to grow, according to Stephen Sheller, one of the lead lawyers in the Risperdal whistleblower and breast litigation.
The company is fighting most of the lawsuits but has settled some others.
Executives at J&J recognize that the federal settlement "represents solid ammunition for all the litigants in the civil cases out there,'' one person familiar with the situation said Monday.
J&J had been negotiating for years to resolve the government investigations. At one point, J&J and prosecutors in Philadelphia had tentatively agreed to a $1 billion settlement of the Risperdal claims, but prosecutors in Washington, D.C., scuttled the proposal as too small, The Wall Street Journal has reported. The rejection prompted the sides to fold in other probes into the deal.
—Devlin Barrett and Joann S. Lublin contributed to this article.
Write to Jonathan D. Rockoff at email@example.com