Johnson & Johnson Announces Tentative Risperdal Settlement

In its quarterly filing with federal securities officials, drug giant Johnson & Johnson just announced a tentative Risperdal settlement. Johnson & Johnson said it has “an agreement in principle’’ with the U.S. Justice Department to settle claims it inappropriately marketed three medications, including the anti-psychotic, Risperdal, said

Johnson & Johnson will likely pay as much as $2.2 billion to settle the government probes, said, citing prior published reports by Bloomberg News and the Wall Street Journal. “We won’t speculate on when a settlement will be finalized,’’ said Johnson & Johnson spokesman Al Wasilewski, wrote The company also said, in the filings, that while it acknowledges the tentative settlement, “issues remain open that must be resolved before the settlements can be finalized.’’

According to Associated Press (AP) and Wall Street Journal reports late last month, following ongoing settlement talks between the pharmaceutical giant, the Department of Justice, and several state attorneys general, that accord includes at least $400 million to settle criminal charges against the company. The exact settlement amount will be determined by the number of states agreeing to its terms.

As we’ve written, federal authorities threatened to ban Johnson & Johnson from marketing its products to the Medicare program, a move that could have drastically and adversely affected the company financially. The charges were filed against the drug maker for allegedly offering kickback payments equaling tens of millions of dollars to a company that sold prescription drugs to a large network of nursing homes.

Johnson & Johnson was accused of marketing Risperdal as a safe and effective treatment for some symptoms of dementia among the elderly. Risperdal is only approved to treat schizophrenia and symptoms of bipolar disorder and actually increases the risk of death in the elderly who suffer from dementia. The drug was being marketed illegally to treat symptoms including irritability and aggression among dementia sufferers. Risperdal was also illegally marketed to treat symptoms of Alzheimer’s disease, which also increased patient risks of death and serious injuries.

The pharmaceutical giant allegedly hired Omnicare Inc. to distribute Risperdal to its nationwide nursing home network for these treatments. While it is not illegal for a physician to prescribe a drug for an off-label treatment, it is a violation of U.S. Food and Drug Administration (FDA) regulations for the manufacturer of the drug to do so. Any new indications for a prescription drug must first receive FDA approval and requires extensive clinical safety trials to determine that the drug provides a benefit to a new class of patients. Omnicare has already agreed to a $90 million settlement over charges tied to this investigation in 2009. Its sales of Risperdal tripled to $280 million during a five-year period when it was alleged to have accepted the largess from Johnson & Johnson.

The Justice Department rejected a $1 billion offer from the drug company earlier this year.

The tentative settlement would also resolve claims authorities in California and Massachusetts brought that Johnson & Johnson’s subsidiary, Janssen Pharmaceuticals, inappropriately marketed Invega and Natrecor, said Invega is prescribed for the treatment of schizophrenia and Natrecor is a treatment for congestive heart failure.

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