News is breaking today that the United States government has slapped a suit against Johnson & Johnson and two of its subsidiaries for allegedly paying kickbacks to nursing homes in an effort to boost sales for a new antipsychotic drug.
J&J has not spoken publicly on the matter as of yet, although they are expected to do so later today. The news of the U.S. suit against Johnson & Johnson comes on the same day it is being reported that the company is broadening its voluntary recall of certain over-the-counter medications that have a “musty, moldy odor”.
From the Wall Street Journal’s story on the federal suit against Johnson & Johnson:
Federal prosecutors alleged that Johnson & Johnson paid one of the nation’s largest pharmacies serving nursing homes “tens of millions of dollars in kickbacks” to increase sales of drugs including blockbuster antipsychotic Risperdal.
A press release issued a short time ago provides even more detail on the kickbacks that Johnson & Johnson is alleged to have paid:
The United States has filed a civil False Claims Act complaint against drug manufacturer Johnson & Johnson (J&J) of New Brunswick, N.J., and two of its subsidiaries, Ortho-McNeil-Janssen Pharmaceuticals Inc. and Johnson & Johnson Health Care Systems Inc., the Justice Department announced today. The complaint alleges that these companies paid millions of dollars in kickbacks to Omnicare Inc., the nation’s largest pharmacy that specializes in dispensing drugs to nursing home patients. In November 2009, the United States, numerous states, and Omnicare entered into a $98 million settlement agreement that, among other things, resolved Omnicare’s civil liability under the False Claims Act for taking kickbacks from J&J.
According to U.S. Attorney Carmen Ortiz, paying kickbacks at nursing homes as J&J is alleged to have done is a particularly egregious offense:
“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.”
According to the Forbes article linked above, former Omnicare pharmacist Bernard Lisizta is the whistle-blower who turned the U.S. Attorney’s office onto this case. Johnson & Johnson is expected to comment on it today.
Omnicare is the largest pharmacy in the United States that caters especially to nursing homes. According to Bloomberg, Johnson & Johnson is reported to have spent millions on kickbacks to boost sales of its products.
Not surprisingly, the latest reports from MarketWatch show J&J’s stock price falling on the heels of this less than positive PR day for the company.
* – Risperdal photo credit: Wikimedia.org