Feds File Suit Against J&J for Alleged Kickback Scheme

Johnson & Johnson and two of its subsidiaries have been named in a kickback scheme that allegedly paid millions of dollars to Omnicare Inc., for dispensing J&J drugs to nursing home patients, the Department of Justice announced today.

In a civil False Claims Act complaint against J&J subsidiaries Ortho-McNeil-Janssen Pharmaceuticals Inc., and Johnson & Johnson Health Care Systems Inc., the federal government alleges that the kickbacks were designed to induce Omnicare's nursing home pharmacy company to purchase and recommend J&J drugs, including the anti-psychotic drug Risperdal.

"We will pursue those who break the law to take advantage of the elderly and the poor," said Tony West, assistant attorney general for DOJ's Civil Division. "Kickbacks such as those alleged here distort the judgments of healthcare professionals and put profits ahead of sound medical treatment."

According to the complaint, J&J knew that Omnicare's pharmacists reviewed nursing home patients' charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients. The government further alleges that J&J knew that physicians accepted the Omnicare pharmacists' recommendations more than 80% of the time, and that J&J viewed such pharmacists as an "extension of [J&J's] sales force."

Johnson & Johnson issued a brief statement Friday afternoon defending its conduct. "We are reviewing the complaint filed today and will address the government's lawsuit in court," said Carol Goodrich, director of Corporate Media Relations at J&J. "We believe airing the facts will confirm that our conduct, including rebating programs like those the government now challenges, was lawful and appropriate. We look forward to the opportunity to present our evidence in court."

In November, the federal government, several states, and Omnicare entered into a $98 million settlement agreement that resolved Omnicare's civil liability under the False Claims Act for taking kickbacks from J&J.

In a statement Friday, Omnicare said, "As announced on November 3, 2009, Omnicare reached a voluntary civil settlement with the U.S. Attorney's Office, District of Massachusetts, the Departments of Justice and Health and Human Services, as well as various of the states in which the Company does business. The settlement related to the previously disclosed investigation with respect to qui tam complaints filed against the Company.

"The Settlement Agreement did not include any finding of wrongdoing or any admission of liability by Omnicare. The Company denies the contentions of the federal government and the qui tam relators as set forth in the complaints and further denies any liability related to those contentions. The Company chose to settle the matter to avoid expensive and time-consuming litigation and to focus on its mission of providing high-quality pharmaceutical care for the frail elderly," according to Omnicare.

The federal complaint alleges that J&J paid the kickbacks to Omnicare in several ways:

• First, J&J allegedly increased the amount of the rebates as long as Omnicare implemented specific programs to increase the prescriptions of J&J drugs, said the Department of Justice.


• Second, J&J allegedly paid Omnicare millions of dollars for "data," much of which Omnicare never provided. The true purpose of these payments was to induce Omnicare to recommend J&J drugs, according to the federal government.


• Third, J&J allegedly made various other kickback payments to Omnicare in the form of "grants" and "educational funding," even though their true purpose was to induce Omnicare to recommend J&J drugs, said the Department of Justice.

DOJ filed its complaint in two consolidated whistleblower lawsuits already on file in federal court in Massachusetts.