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JandJ paid millions in kickbacks to boost sales


Federal prosecutors in Boston said Friday that health care giant Johnson and Johnson paid tens of millions of dollars in kickbacks so nursing homes would put more patients on its blockbuster schizophrenia medicine and other drugs.

In a complaint filed last week, prosecutors said JandJ paid the kickbacks, in the form of special rebates and other payments, to Omnicare Inc., the country’s biggest dispenser of prescription drugs in nursing homes. Prosecutors allege Omnicare pharmacists then recommended that nursing home patients with signs of Alzheimer’s disease be put on the powerful schizophrenia drug Risperdal, which was later found to increase risk of death in the elderly.

The allegation comes in a complaint just filed by the U.S. Attorney in Boston in a whistle-blower case originally brought by a former Omnicare pharmacist in Chicago, Bernard Lisitza.

“Kickbacks in the nursing home pharmacy context are particularly nefarious because they can result in excessive prescribing of strong drugs to patients who have little or no control over the medical care they are receiving,” U.S. Attorney Carmen Ortiz said in a statement. “Nursing home doctors should be able to rely on the integrity of the recommendations they receive from pharmacists, and those recommendations should not be a product of money that a drug company is paying to the pharmacy.”

Johnson and Johnson, based in New Brunswick, N.J., said in a statement it is reviewing the complaint and “will address the government’s lawsuit in court. 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.”

Ortiz’s office is seeking triple damages, restitution and other penalties under the federal False Claims Act and other laws.

Its complaint alleges the scheme went on from 1999 through 2004, and during that period JandJ’s sales of drugs through Omnicare jumped from about $100 million to more than $280 million. More than one-third of that was sales of Risperdal.

After that period, the Food and Drug Administration required Risperdal to be sold with its most severe, “black box” warning, stating that giving elderly patients with dementia-related psychosis Risperdal and similar drugs increased their risk of death.

“The government’s complaint paints a sordid picture of JandJ payola driving sales of drugs in nursing homes,” said Michael Behn, the lead attorney who filed the whistle-blower complaint on behalf of Lisitza. “Pharmacists are trusted professionals. There can be zero tolerance for kickbacks.”

Last November, Omnicare agreed to a $90 million settlement with the federal government and numerous states to resolve its liability in the case, according to Ortiz.

The complaint states that Johnson and Johnson knew Omnicare pharmacists reviewed the charts of nursing home patients at least once a month, then made recommendations to physicians on what drugs patients should be getting. The complaint alleges JandJ knew physicians accepted those recommendations more than 80 percent of the time and states that JandJ considered those pharmacists an “extension of (JandJ’s) salesforce.”

The government accuses JandJ of making an agreement under which Omnicare operated “Active Intervention Programs” to increase prescribing of JandJ drugs, and that Johnson and Johnson paid Omnicare for that in a variety of ways. Those included so-called “grants” and “educational funding,” and payments for prescription use data that was never provided.

Under one of the programs, called the “Risperdal Initiative,” physicians were persuaded to prescribe Risperdal to patients with “behavioral disturbances associated with dementia,” the government alleges.

Besides Johnson and Johnson, the complaint names two of its subsidiaries as defendants: Ortho-McNeil-Janssen Pharmaceuticals Inc., which makes and sells Risperdal and other drugs, and Johnson and Johnson Health Care Systems Inc., which entered into contracts with Omnicare.

In morning trading, Johnson and Johnson shares fell 77 cents to $64.33.

(Associated Press)