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Johnson & Johnson will pay the U.S. government more than $1 billion to settle claims that it illegally marketed the antipsychotic drug Risperdal, urging doctors to use it in ways never approved by the FDA.
The settlement would see payments go to a number of states that have sued Johnson & Johnson for Medicare fraud and accused the company of downplaying the side effects of Risperdal while illegally marketing the drug.
Whether the company will agree to plead guilty to criminal charges, in addition to the monetary settlement, has not yet been determined.
The U.S. Department of Justice (DOJ) has been investigating Johnson & Johnson’s marketing of Risperdal since 2004, when it began looking into an alleged kickback scheme between the drug maker and Omnicare, the nation’s largest provider of drugs to nursing homes.
Risperdal is frequently used as a “chemical restraint” in nursing homes, used to subdue unruly residents. However, studies have shown that the drug increases the risk of death in patients with dementia, and there have been nationwide efforts to curb its use for such off-label purposes.
Off-label marketing occurs when a drug company promotes the use of its drug for purposes other than those approved by the FDA, and is illegal. Doctors can prescribe a drug for any purpose they see fit, but companies cannot promote them for unapproved uses.
In 2009, Omnicare reached a settlement with DOJ over kickback charges. The DOJ investigators indicated that Johnson & Johnson paid Omnicare millions to push off-label use of Risperdal to nursing home doctors and hid the kickbacks as data fees, education fees and payments to attend Omnicare meetings. In January 2010, the DOJ filed a civil False Claims Act complaint against J&J.
A number of states are likely to split some of the settlement payments, but some states will opt out, having pursued their own claims against Johnson & Johnson. A Texas Risperdal lawsuit trial begins next week, and South Carolina is pursuing $327 million in damages against the company on its own. A Louisiana jury has already turned in a $257.7 million verdict against Johnson & Johnson in that state.