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January 16, 2010

Johnson & Johnson Accused of Drug Kickbacks


Johnson & Johnson paid kickbacks to the nation’s largest nursing home pharmacy to increase the number of elderly patients taking the antipsychotic Risperdal and several other medications, according to a complaint filed Friday by the office of the United States attorney in Boston.

The payments violated the federal anti-kickback statute and led Omnicare, a pharmacy company specializing in dispensing drugs to nursing home residents, to submit false claims to Medicaid, the complaint charged.

The government’s civil complaint joins a whistle-blower suit against Johnson & Johnson brought by two former employees of Omnicare, which has headquarters in Covington, Ky.

Johnson & Johnson said Friday it was reviewing the complaint and intended to address the government’s lawsuit in court. The complaint charges that Johnson & Johnson, based in New Brunswick, N.J., and two of its subsidiaries, Ortho-McNeil-Janssen Pharmaceuticals and Johnson & Johnson Health Care Systems, paid tens of millions of dollars to induce Omnicare to buy and recommend Risperdal for elderly patients as well as the drug maker’s prescription pain relievers Duragesic and Ultram, and the antibiotic Levaquin.

The complaint charges that Omnicare’s pharmacists engaged in intensive efforts to persuade physicians to prescribe the drugs from 1999 to 2004, a period in which the pharmacy’s annual purchase of Johnson & Johnson medications nearly tripled to more than $280 million, from about $100 million. During the same period, the pharmacy’s annual purchase of Risperdal rose to more than $100 million, according to the complaint filed in United States District Court in Massachusetts.

“Kickbacks in the nursing home pharmacy context are particularly nefarious,” Carmen M. Ortiz, the United States attorney for Massachusetts, said in a statement Friday. In return for Omnicare’s efforts, the drug maker allegedly paid the pharmacy company kickbacks in the form of rebates based on the market share of some Johnson & Johnson drugs, sponsorship of Omnicare meetings, grants and payments for Omnicare data, like the prescribing habits of doctors, of the kind that Omnicare had previously provided the drug maker for free, the complaint said.

“When it comes to the sometimes questionable practice of promoting brand-name drugs to doctors and their patients, this case represents the lowest of the low,” Senator Herb Kohl, the Wisconsin Democrat who is the chairman of the Senate Special Committee on Aging, said in an e-mail message sent Friday in response to a reporter’s question. “Nursing home residents comprise a vulnerable population that should be able to trust that their physician’s advice is based on medical expertise, not financial self-interest.”

Although the events described in the complaint took place several years ago, Mr. Kohl wrote that the aging committee was continuing to investigate the issue of the overuse of antipsychotic drugs in nursing homes.

Johnson & Johnson issued an e-mail statement in response to a reporter’s question.

“We believe airing the facts will confirm that our conduct, including rebating programs like those the government now challenges, was lawful and appropriate,” the statement said. “We look forward to the opportunity to present our evidence in court.”

Omnicare, with a market capitalization of about $3.1 billion, serves more than 1.4 million residents of nursing homes, assisted living and other health care facilities in 47 states and Canada, according to the company’s Web site.

Last November, Omnicare paid $98 million to settle civil charges by the government that it had violated the False Claims Act for engaging in kickback schemes with Johnson & Johnson and a smaller drug maker.

The settlement agreement did not include any finding of wrongdoing or any admission of liability by Omnicare, the company said in a statement issued in November. Omnicare denies the contentions of the federal complaint settled last fall and denies any liability related to those contentions, the statement said.

The government has regulations in place to protect nursing home residents from medication mismanagement, like being sedated with psychiatric drugs for the purposes of discipline or convenience. The Department of Health and Human Services requires nursing homes to arrange for an outside consulting pharmacist to review a patient’s medication regimen at least once a month.

These outside pharmacists have a duty to report any irregularities to the attending physician; the pharmacists also have the ability to recommend that a physician remove, change or add medications to a patient’s drug regimen, the complaint said.

But the government’s complaint in the Johnson & Johnson case raises the question of whether some companies have used the consultant pharmacists — the very people entrusted by the government with safeguarding the integrity of nursing home drug prescriptions — for corporate gain.

In this case, according to the complaint, Omnicare’s consultant pharmacists worked to increase Risperdal’s market share.

“If true, these allegations represent a cynical manipulation of the laws intended to protect nursing home residents, as well as yet another rip-off of the Medicaid program,” Senator Charles E. Grassley, the Iowa Republican who has investigated the corporate conduct of certain drug makers, said in a statement Friday in response to a reporter’s question. “If consultant pharmacists aren’t independent, both the patient and the taxpayer lose.”

In one company document among the court exhibits, for example, Omnicare said that its efforts generated a record market share high of 55.5 percent for Risperdal in the first quarter of 2000.

“This market share represents Omnicare’s ability in persuading physicians to write Risperdal in the areas of behavioral disturbances associated with dementia,” the Omnicare document said.

But Risperdal, which is approved by the Food and Drug Administration to treat schizophrenia and bipolar disorder, is not specifically approved to treat behavioral problems in elderly people with dementia. In fact, in 2005 the F.D.A. required that the labels of certain antipsychotic drugs, including Risperdal, carry a black box label warning that elderly people with dementia-related psychosis treated with such drugs were at an increased risk of death compared with those taking a placebo.

In the e-mail message to a reporter, Mr. Kohl noted that the government’s complaint was not the first charge against a drug company for improperly marketing antipsychotic drugs to aging populations.

Last January, the drug maker Eli Lilly pleaded guilty to a misdemeanor and paid $1.415 billion to settle criminal and civil charges that the drug maker had marketed its antipsychotic Zyprexa for the treatment of elderly people with dementia.

The exhibits attached to the complaint depict the efforts of Omnicare and Johnson & Johnson to increase market share for Risperdal against competing antipsychotics like Zyprexa and Seroquel from AstraZeneca.

In an Omnicare letter to Johnson & Johnson in 2001, an executive wrote that the pharmacy planned to spend about $173 million on Johnson & Johnson products.

The executive wrote in capital letters, “We are selling more high-priced drugs (read Risperdal here) for the pharmaceutical industry!!”

A Recall is Expanded

By The Associated Press

Johnson & Johnson expanded a recall of over-the-counter medications on Friday, the second time it had done so in less than a month because of a moldy smell that has made users sick.

The broadening recall includes some batches of regular and extra-strength Tylenol children’s Tylenol, eight-hour Tylenol, Tylenol arthritis, Tylenol PM, children’s Motrin, Motrin IB, Benadryl Rolaids, Simply Sleep and St. Joseph’s aspirin. Caplet and gel tab products sold in the Americas, the United Arab Emirates and Fiji were recalled.

The company’s McNeil Consumer Healthcare Products unit recalled some Tylenol Arthritis Caplets in November because of the smell, which caused nausea, stomach pain and diarrhea. A few weeks ago, the company expanded its recall to include Tylenol Arthritis Caplets.

Johnson & Johnson said the smell was caused by small amounts of a chemical associated with the treatment of wooden pallets. The F.D.A. said the chemical could volatilize into the air, and traced it to a plant in Las Piedras, P.R.