Whistleblower Payment to Top $165M in Johnson & Johnson Settlement

Whistleblowers who brought attention to problems with Johnson & Johnson’s marketing of Risperdal and other drugs will receive a record $168 million payment as part of the recent settlement the company made with the federal government.  

The Department of Justice (DOJ) will divide the money among several Johnson & Johnson employees from Pennsylvania, California and Massachusetts who assisted in the investigation and who brought whistleblower lawsuits against the pharmaceutical giant.

The sole whistleblower from California, Joe Strom, was an employee of the company’s Scios subsidiary. He sued Johnson & Johnson in 2005 in a qui tam lawsuit and helped Justice Department prosecutors during the case. He will receive $28 million. Judith Doetteri, a former sales rep, went as far as going undercover and wearing a wire to a Risperdal sales conference to help collect evidence.

Under the qui tam provisions of the False Claims Act, whistleblowers who expose fraud by revealing information not publicly accessible are entitled to a portion of any money recovered by the U.S. government.

Whistleblowers must be the first to bring the case to the government’s attention and not publicize the lawsuit until the Department of Justice decides whether to join the prosecution of the case. By law, they can receive between 15% and 30% of the money collected by the government if the lawsuits result in a monetary settlement or fines.

The Johnson & Johnson whistleblower payments comes from a $2.2 billion settlement the company recently agreed to pay to resolve claims that it illegally marketed Risperdal, Invega and Natrecor. The government charged the company with promoting the drugs for uses not approved by the FDA, and for paying kickbacks to doctors and pharmacists who convinced patients to prescribe to the drugs.

Prosecutors claim that in many cases, Risperdal was promoted off-label for use as a chemical restraint to control elderly patients, which is often considered a form of nursing home abuse and potentially put dementia patients’ lives at risk.

Johnson & Johnson agreed to pay criminal fines and forfeitures of $485 million, $1.72 billion in civil liability settlements, and entered into a corporate integrity agreement that allows the government to more closely monitor the company’s business activities.

Investigation Took Nearly A Decade

The DOJ began investigating Johnson & Johnson’s marketing of Risperdal in 2004, looking into an alleged kickback scheme between the drug maker and Omnicare, the nation’s largest provider of drugs to nursing homes.

In 2009, Omnicare reached a settlement with DOJ over kickback charges. 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 Johnson & Johnson, which also accused the drug maker of illegally promoting Risperdal for use among children prior to obtaining FDA approval for such use. Concerns have also been raised about the potential side effects of Risperdal use by children increasing the risk of childhood diabetes.

The DOJ says that the FDA repeatedly warned Johnson & Johnson that it would be misleading to promote Risperdal as safe and effective for the elderly and that behavioral disturbances by elderly patients may not be signs of psychotic disorders. The agency even told the company that some behavioral problems by elderly in nursing homes were likely “appropriate responses to the deplorable conditions under which some demented patients are housed, thus raising an ethical question regarding the use of an antipsychotic medication for inappropriate behavioral control.”