Johnson & Johnson to settle marketing allegations

Johnson & Johnson agreed to pay $158 million to settle allegations involving off-label marketing of its antipsychotic drug Risperdal to physicians in Texas, which the Texas attorney general said led the state’s Medicaid program to overpay for the drug for more than a decade. The state alleged that Janssen Pharmaceuticals, a Raritan, N.j.-based subsidiary of Johnson & Johnson, inappropriately encouraged physicians to prescribe the drug, including to children for schizophrenia and the elderly for dementia, from 1994 to 2008. The Food and Drug Administration had not approved the drug for those indications at that time. Texas Attorney General Greg Abbott, in a written statement, called the marketing a “scheme to profit from the Medicaid program by overstating the safety and effectiveness of an expensive drug.” The company did not admit wrongdoing in the settlement, according to a Janssen spokeswoman. “Settlements frequently are reached to bring to a conclusion a long-standing litigation where the potential financial exposure to the company is significant, the outcome is uncertain despite the facts and where there are likely to be long and expensive appellate activities regardless of the outcome at trial,” Janssen said in a statement. The $158 million will be allocated to the whistle-blower who initiated the lawsuit in 2004; his attorneys; the state of Texas; and the federal government. Johnson & Johnson faces several lawsuits involving Risperdal and after a trial last year in South Carolina was ordered to pay $327 million. In August, the company disclosed in a securities filing that it had reached an agreement in principle with the U.S. Justice Department to settle a related misdemeanor charge.