Global health-care giant Johnson & Johnson has agreed to pay more than $2.2 billion to settle allegations of fraudulently marketing drugs and paying kickbacks to promote their sales, the government 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 schizophrenia drug Risperdal and other prescription drugs for uses not approved as safe and effective by the Food and Drug Administration (FDA), the Justice Department said.
The settlement further covers kickbacks allegedly paid to physicians and pharmacies for prescribing and promoting those drugs by J&J.
The actions resulted in millions of dollars in benefits paid by 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."
Under federal law, pharmaceutical companies only are allowed to market drugs for purposes approved by the FDA.
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 the states.
J&J unit Janssen Pharmaceuticals pleaded guilty to the criminal charge of interstate promotion of 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.
Janssen knew that Risperdal posed serious health risks for the elderly, including an increased risk of strokes, and for children, including the risk of elevated levels of prolactin, a hormone that can stimulate breast development and milk production, according to the complaints.
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, which makes a broad range of consumer products, including Band-Aid bandages, Neutrogena soaps and Johnson's Baby Powder, 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."
The company said that the settlement had been "previously accrued, and no additional charge to the company's earnings will be recorded in connection with this settlement."
Shares in Dow member J&J were down 0.6 percent at $92.80 in afternoon trading. Omnicare shares rose 1.1 percent to $55.80.