J&J reportedly agrees to pay $1b in sales probe

NEW YORK - Johnson & Johnson will pay more than $1 billion to the United States and most states to resolve a civil investigation into marketing of the antipsychotic Risperdal, people familiar with the matter said.

J&J, the world’s largest health products company, reached an accord last week with the US attorney in Philadelphia, according to the people, who were not authorized to speak about the matter.

It does not resolve negotiations over a possible criminal plea, they said.


The federal government has been investigating Risperdal sales practices since 2004, including allegations the company marketed the drug for unapproved uses, J&J has said in Securities and Exchange Commission filings. The company said it has been in negotiations with the United States to settle this investigation.

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J&J, based in New Brunswick, N.J., disclosed in August that it had agreed to settle a misdemeanor criminal charge related to Risperdal marketing. The company is in negotiations to pay about $400 million more to settle this portion of the investigation, one of the people said.

“We’re not going to comment on rumor or speculation,’’ said Teresa Mueller, a J&J spokeswoman.

Company officials said in an SEC filing in May that they had reserved funds to resolve the government’s claims. The company did not say how much had been set aside.

When the final settlement will be announced is not clear.


A majority of the states will join the settlement, the people said. Which ones will accept the final agreement has not been determined, they said. Each state can decide whether to join the federal government’s settlement or pursue its own case.

Typically, states with cases in court continue to pursue their own.

Texas alone is asking for more than $1 billion in a case that goes to trial next week. Risperdal, which was first approved by the Food and Drug Administration in 1993, later became J&J’s best-selling drug.

Worldwide sales totaled $24.2 billion from 2003 to 2010, reaching $4.5 billion in 2007. After that, J&J lost patent protection and sales declined.

J&J and its Janssen unit, which sold Risperdal, deny any wrongdoing in the Texas case.


“Janssen is prepared to vigorously defend itself against these claims,’’ Mueller said in an e-mail. “We are committed to ethical business practices, and have policies in place to ensure that our products are only promoted for their FDA-approved indication.’’

J&J and its Janssen unit have been sued by 12 states, including Texas, South Carolina, and Louisiana, over Risperdal marketing.

A jury in Louisiana, weighing claims that the company downplayed the drug’s risks, awarded that state $257.7 million in 2010. A South Carolina judge last year ordered J&J to pay $327 million over Risperdal sold in the state.

The FDA approved Risperdal in 1993 for psychotic disorders including schizophrenia. That market is limited, and Janssen sought to sell Risperdal for bipolar disorder, dementia, mood and anxiety disorders, and other unapproved uses, according to documents in the lawsuit by the State of Louisiana.

Hundreds of Janssen sales people sold to doctors, nursing homes, Veterans Administration facilities, and jails, the records show. Marketers gave doctors materials about studies of unapproved uses for Risperdal.

In 1994, 1999, and 2004, the FDA ordered Janssen to stop making false and misleading marketing claims about Risperdal’s superiority.

The FDA told J&J in 1999 that its marketing materials for geriatric patients overstated Risperdal’s benefits and minimized risks. A J&J business plan for the next year called for increasing the drug’s market share for elderly dementia sales, an unapproved use, according to documents in the Louisiana lawsuit.

The FDA didn’t approve Risperdal for bipolar disorder until 2003. In 2006, the regulator approved it for symptoms related to autism in children and teens. The FDA approved it to treat bipolar children and teens the next year. It was never approved for dementia.