By David Ingram and Ros Krasny
WASHINGTON, Nov 4 (Reuters) - In one of the largest healthcare fraud settlements in U.S. history, Johnson & Johnson will pay $2.2 billion to end civil and criminalinvestigations into kickbacks to pharmacists and the marketingof pharmaceuticals for off-label uses, U.S. Attorney GeneralEric Holder said on Monday.
The resolution of the long-running case covers the marketingof the anti-psychotic drugs Risperdal and Invega and the heartdrug Natrecor over several years.
From 1999 through 2005, J&J and its subsidiary JanssenPharmaceuticals Inc promoted Risperdal for unapproved uses,including controlling aggression and anxiety in elderly dementiapatients and treating behavioral disturbances in children and inindividuals with disabilities, according to the complaint.
The off-label marketing cost U.S. government insuranceprograms hundreds of millions of dollars in uncovered claims,the complaint said.
Under the settlement, Janssen will plead guilty to a singlemisdemeanor violation for its promotion of Rispersdal.
Meanwhile, the company paid millions of dollars in kickbacksto Omnicare Inc, the nation's largest pharmacyspecializing in dispensing drugs to nursing home patients, undervarious guises including "educational funding."
Johnson & Johnson's conduct "recklessly put at risk" thehealth of children, dementia patients and others to whom thedrug was prescribed at a time it was only approved by the U.S.Food and Drug Administration to treat schizophrenia, Holdersaid.
Janssen's sales representatives "aggressively" promotedRisperdal to doctors and other prescribers who treated elderlydementia patients, and through a special "ElderCare sales force"targeted nursing home operators.
"The company also provided incentives for off-labelpromotion" and based sales representatives' bonuses on totalsales, not just sales for FDA-approved uses, the DOJ said.
Under FDA regulations, doctors may prescribe drugs forunapproved, or off-label, use. But pharmaceutical companies areallowed to market their drugs in the United States only forFDA-approved uses.
The FDA said it had delivered repeated warnings to Janssenabout "misleading marketing messages" to doctors, and laterinitiated a criminal complaint.
"Our investigators devoted considerable time and resourcesto this case, to help ensure that pharmaceutical companies donot mislead healthcare providers and the general public," JohnRoth, director of the FDA's Office of Criminal Investigations,said in a statement.
As part of the settlement, Justice Department lawyers fileda civil complaint against Johnson & Johnson in U.S. DistrictCourt for the Eastern District of Pennsylvania on Monday.
Johnson & Johnson said that the settlement of "the civilallegations is not an admission of any liability or wrongdoing,and the company expressly denies the government's civilallegations."
Monday's settlement also resolved allegations that J&J and asubsidiary, Scios Inc., marketed Natrecor for off-label uses notapproved by the FDA and not covered by federal healthcareprograms.
J&J disclosed in a securities filing in 2011 it had reachedan agreement to resolve criminal penalties related to thepromotion of Risperdal, which was once one of the company'sbiggest sellers, but that certain issues remained open.
The company on Monday said no additional charges will berecorded to earnings in connection with the settlement. J&Jshares were down about 0.9 percent in midday trading on the NewYork Stock Exchange.
"We reached closure on complex legal matters spanning almosta decade," said Michael Ullmann, general counsel of Johnson &Johnson.
Most large drugmakers have had to pay major fines to theU.S. government and various states over the past decade foralleged improper marketing of their medicines.
Pfizer Inc in 2010 agreed to pay $2.3 billion tosettle allegations it improperly marketed 13 drugs, includingkickbacks to healthcare providers.
Last year, Britain's GlaxoSmithKline Plc agreed topay $3 billion to resolve criminal charges that it improperlytargeted its Paxil depression treatment to children, sold itsWellbutrin antidepressant for unapproved uses and failed toinform U.S. regulators of safety risks seen with its Avandiadiabetes drug.
Glaxo is now under the microscope of Chinese police, who inrecent months alleged it has participated in a widespreadbribery and corruption scheme in which the company used travelagencies to funnel illegal payments to doctors and governmentofficials to bolster drug sales.
Other drugmakers this year have also come under scrutiny inChina, both for marketing practices and drug prices, but Glaxohas suffered the most damage from the scandal as many Chinesedoctors have shunned its sale representatives. Glaxo's drugsales in China plunged 61 percent in the third quarter.
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