Johnson & Johnson, Janssen settle off-label Risperdal claims for $2.2 billion

Brian McCormick remembers meeting Victoria Starr back in 2007 when he first started working for Sheller P.C.

The Oregon woman had approached the Philadelphia law firm about three years prior about filing a qui tam lawsuit on behalf of the U.S. government against the makers of the antipsychotic drug Risperdal.

Starr, a former sales representative for Janssen Pharmaceutica, a wholly-owned subsidiary of drugmaker Johnson & Johnson, felt like she was being encouraged and pressured to market Risperdal off-label.

McCormick’s law firm filed Starr’s qui tam suit in April 2004, three months after the woman quit her job.

She had begun working for Janssen in about 2001.

On Monday, Johnson & Johnson announced that it would be paying more than $2.2 billion to resolve civil and criminal claims relating to allegations that the company marketed Risperdal, a drug primarily designed to treat bi-polar disorder and schizophrenia, for uses other than those approved by the Food and Drug Administration.

The pharmaceutical manufacturer will pay $1.673 billion to resolve the allegations of off-label marketing for Risperdal and sister drug Invega, the resolution marking the largest involving a single drug in U.S. history, and the third-largest healthcare fraud settlement involving one company, according to the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

The massive settlement that resulted from a whistleblower suit filed at the federal courthouse in Philadelphia nearly seven years ago gave McCormick pause for thought.

“We’re obviously pleased with the settlement and with the amount,” he said in a phone interview Monday afternoon. “We believe that Risperdal is a dangerous product for children and adolescents and the elderly, which were … the primary groups that the drug was being illegally marketed for.”

McCormick said there is no doubt in his mind that Johnson & Johnson had been promoting Risperdal and Invega for off-label uses because of the “enormous profits” that the company was seeing from drug sales.

Back in the early days of Risperdal, there seemed to be just a small market for the medication, McCormick said, but then, “all of a sudden, Risperdal becomes a blockbuster drug … because it is being marketed” to a larger segment of the U.S. population.

Actions that are filed under the qui tam provision of the False Claims Act are typically done so under seal, McCormick explained.

Hence why Starr’s civil suit sat virtually unnoticed for quite some time.

Eventually, the U.S. Government stepped in, launching its own complaint in intervention against Janssen and J&J.

The United States became involved because federal money was at stake, namely Medicare and Medicaid funding.

In its civil action, the government alleged that Janssen and J&J promoted Risperdal for uses that were not approved as safe and effective by the FDA from at least 1999 through 2005.

The suit says that the defendants even established a specialized ElderCare sales force to promote Risperdal to older folks.

“This sales force promoted Risperdal in nursing homes to control agitation, aggression, and other behavioral disturbances in elderly dementia patients,” the government’s suit reads.

Janssen, the complaint stated, promoted Risperdal to control behavioral disturbances and conduct disorders in children and to treat attention deficit disorder and other off-label conditions.

The government also maintained that Janssen promoted Risperdal for use in the general population to control mood and anxiety symptoms unrelated to any psychotic disorder.

Clinical trials soon showed that taking Risperdal increased the risk of stroke in senior citizens and diabetes in all patients.

“By knowingly and actively promoting Risperdal as safe and effective for off-label and non-covered uses, defendants caused Medicaid and other federal healthcare programs to pay hundreds of millions of dollars for uncovered claims,” the government’s suit stated.

In a criminal information that was filed in Philadelphia Monday, the government alleged that when Janssen introduced Risperdal for a new, unapproved use, the product was officially rendered misbranded.

The drug company entered into a plea agreement in which it admitted that between March 3, 2002 and Dec. 31, 2003, it promoted Risperdal to healthcare providers for the treatment of psychotic symptoms and associated disturbances exhibited by elderly, non-schizophrenic dementia patients.

Under the terms of its plea agreement, Janssen will pay a total of $400 million, including a criminal fine of $334 million and forfeiture of $66 million, according to the U.S. Attorney’s Office in Philadelphia.

In its civil complaint, the government also alleged that the defendants paid kickbacks to prescribing physicians, and that Janssen paid speaker fees to doctors to influence them to write more prescriptions for Risperdal.

Sales representatives, the government maintained, allegedly informed doctors that if they wanted to receive payments for speaking engagements, they needed to increase their Risperdal prescriptions.

For its conduct, J&J will be paying $1.273 billion in civil penalties.

The drug company had already paid $118 million to the State of Texas in the spring of 2012 to resolve similar allegations involving both state and federal money, according to the U.S. Attorney’s Office.

“The conduct at issue in this case jeopardized the health and safety of patients and damaged the public trust,” U.S. Attorney General Eric Holder said in a statement. “This multibillion-dollar resolution demonstrates the Justice Department’s firm commitment to preventing and combating all forms of health care fraud. And it proves our determination to hold accountable any corporation that breaks the law and enriches its bottom line at the expense of the American people.”

Zane Memeger, the U.S. Attorney for the Eastern District of Pennsylvania, said that Johnson & Johnson’s promotion of Risperdal for unapproved uses “threatened the most vulnerable populations of our society – children, the elderly, and those with developmental disabilities.

“This historic settlement sends the message that drug manufacturers who place profits over patient care will face severe criminal and civil penalties,” Memeger said in a statement.

Johnson & Johnson general counsel Michael Ullmann said in a news release that the defendant “reached a closure on complex legal matters spanning almost a decade.

“This resolution allows us to move forward and continue to focus on delivering innovative solutions that improve and enhance the health and well-being of patients around the world,” Ullmann said in his statement.

The settlement also subjects J&J to stringent requirements under a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General.

The agreement is designed to increase accountability and transparency and prevent future fraud and abuse.

Namely, the agreement includes provisions that require the drug company to implement major changes to the way its pharmaceutical affiliates do business.

“OIG will work aggressively with our law enforcement partners to hold companies accountable for marketing and promotion activities that violate laws intended to protect the public,” Daniel R. Levinson, the inspector general for the Department of Health and Human Services, said in a statement. “Our compliance agreement with Johnson & Johnson increases individual accountability for board members, sales representatives, company executives and management.”

John Roth, director of the FDA’s Office of Criminal Investigations, said in a statement that the government agency would continue to devote resources to investigations targeting drug manufacturers that “disregard the drug approval process and recklessly promote drugs for uses that have not been proven to be safe and effective.

“When pharmaceutical companies interfere with the FDA’s mission of ensuring that drugs are safe and effective for the American public, they undermine the doctor-patient relationship and put the health and safety of patients at risk,” Roth stated.