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New Jersey's Johnson & Johnson banking on Risperdal lawsuits

A major pharmaceutical company based in New Jersey is apparently setting aside funds to settle commercial litigation over schizophrenia drug Risperdal and other medications. Johnson & Johnson has already made several recalls of the drug and is planning to designate an additional $600 million to cover potential settlements of civil lawsuits related to its marketing of Risperdal and other drugs.

The main settlement involves the U.S. Department of Justice, which joined two lawsuits in January 2010 after investigating claims of abusive marketing practices. Johnson & Johnson was first accused by a whistleblower of paying kickbacks to Omnicare, Inc., a nursing home pharmacy chain, from 1999 through 2004 to purchase and promote Risperdal and other drugs for use in nursing homes. The $600 million would cover the criminal penalty for a misdemeanor plea.

Omnicare was one of Johnson & Johnson's biggest clients. In the years it allegedly accepted kickbacks, its purchases from Johnson & Johnson rose from $100 million to $280 million annually. Furthermore, the Justice Department alleges, Johnson & Johnson knew that doctors accepted the recommendations of Omnicare pharmacists more than 80 percent of the time, and that the company viewed those pharmacists as an "extension of its sales force."

Johnson and Johnson has argued that it gave standard discounts to the pharmacy that were not illegal provided they were disclosed.

A settlement with the Department of Justice wouldn't resolve lawsuits brought by officials in three states. Judges and juries in Arkansas, Louisiana and South Carolina have demanded that Johnson & Johnson pay almost $1.8 billion in fines and damages over illegal marketing campaigns.

The Justice Department's settlement with Johnson and Johnson would represent the government's second-largest settlement with a pharmaceutical company. (Pfizer paid a $2.3 billion settlement for improperly marketing the painkiller Bextra and other drugs.) Such lawsuits aren't uncommon, and Johnson & Johnson's allocation of funds to fight them may turn out to be a wise move. If your company is facing civil lawsuits alleging any type of business practices, you'll need a competent, experienced commercial litigation attorney to avoid paying more than necessary to settle or win your case.

Source: Domain-b.com, "Johnson & Johnson to set aside $600 mn for Risperdal lawsuits settlement," June 9, 2012

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