Johnson & Johnson to set aside $600 mn for Risperdal lawsuits settlement

Healthcare major Johnson & Johnson (J&J), which has recently made a series of recalls and in the midst of several lawsuits, yesterday said that it will set aside about $600 million in the second quarter to cover a potential settlement of civil lawsuits related to marketing of its schizophrenia treatment Risperdal and other drugs.

The New Jersey-based company had said in January that it has established a $1.7 billion fund for litigation settlements, and yesterday set aside an additional $600 million to cover potential settlements over its anti- psychotic drug Risperdal and Invega, and for cases involving its heart failure drug Natrecor.

J&J has been accused of having paid kickbacks to a company that dispenses drugs to nursing homes.

In January 2010, the US Department of Justice (DOJ) joined two lawsuits, including one brought by a whistleblower, alleging that J&J paid kickbacks, starting from 1999 through 2004, to Omnicare Inc to induce the nursing home pharmacy chain to purchase and recommend J&J's Risperdal, Invega and Natrecor drugs for use in nursing homes. (See: US justice dept hauls J&J to court for paying kickbacks)

The DOJ has further alleged that J&J knew that physicians accepted the Omnicare pharmacists' recommendations more than 80 per cent of the time, and that J&J viewed such pharmacists as an "extension of its sales force."

During the period between 1999 and 2004, Omnicare was one of J&J's largest clients and its purchases from J&J rose from $100 million to $280 million annually after receiving kickbacks from J&J.

J&J argued that it gave standard discounts to Omnicare, and that those discounts were not illegal as long as they were properly disclosed.

Omnicare agreed to pay $98 million plus interest to the federal government and a number of state Medicaid programmes to settle allegations that it participated in kickback schemes with J&J, IVAX - a subsidiary of Israel's Teva Pharmaceutical Industries - and two nursing home chains.

J&J is also facing a number of lawsuits from states for improperly marketing Risperdal to patients for which it was not approved by the US Food and Drug Administration - including elderly residents of nursing homes.

In April, an Arkansas state judge ordered J&J to pay more than $1.1 billion for illegally marketing and misleading doctors and patients about the risks of Risperdal.

The DoJ is seeking about $1.8 billion to resolve the civil claims, an increase from a $1 billion settlement that had been negotiated by the US Attorney's Office in Philadelphia in late December 2011.

J&J has issued a series of product recalls across a wide range of products over the past two years due to manufacturing-quality problems that have cost the company more than $3 billion.

A few of J&J's recent recalls:

• Vaginal mesh implants
• Hip replacement products
• Anaemia drug Eprex
• Rolaids heartburn products
• Children's Benadryl allergy tablets
• Junior-strength Motrin
• Zyrtec
• Extra Strength Tylenol
• Extra Strength Tylenol Rapid Release
• Motrin IB
• Regular Strength Tylenol
• Rolaids
• Simply Sleep
• St Joseph Aspirin
• Tylenol Arthritis
• Tylenol PM
• Day Acuvue contact lenses

J&J has also been slapped with a growing number of lawsuits, including:

• Defective hips devices that require additional surgery
• Medicare/Medicaid fraud
• Baby shampoo found with banned ethylene chloride
• Price fixing in China
• Patent infringement
• Risks with Ortho Evra birth control patch
• Bribery in Greece, Poland, Romania and Iraq