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
- Extra Strength Tylenol
- Extra Strength Tylenol Rapid Release
- Motrin IB
- Regular Strength Tylenol
- 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