U.S. Files Suit Against Johnson & Johnson for Paying Kickbacks to Nation's Largest Nursing Home Pharmacy

January 15, 2010 - 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.

In its complaint against J&J, the United States alleges that the company paid kickbacks to Omnicare to induce the nursing home pharmacy company to purchase and recommend J&J drugs, including the anti-psychotic drug Risperdal, for use in nursing homes. According to the complaint, J&J understood 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 percent of the time, and that J&J viewed such pharmacists as an “extension of [J&J’s] sales force.”

The United States alleges that, in order to induce Omnicare and its pharmacists to recommend J&J drugs, the company paid kickbacks to Omnicare in numerous ways. First, the complaint alleges that J&J entered into agreements with Omnicare by which Omnicare was entitled to increasing levels of rebates from Johnson & Johnson so long as Omnicare implemented specific programs to increase the prescriptions of J&J drugs. Second, the complaint alleges that J&J paid Omnicare millions of dollars for “data,” much of which Omnicare never provided. According to the complaint, the true purpose of these payments was to induce Omnicare to recommend J&J drugs. Third, the complaint alleges that J&J made various other substantial kickback payments to Omnicare, calling the payments “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend J&J

“We will pursue those who break the law to take advantage of the elderly and the poor,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Kickbacks such as those alleged here distort the judgments of health care professionals and put profits ahead of sound medical treatment.”

The United States filed its complaint in two consolidated whistleblower lawsuits presently on file in the District of Massachusetts.

Assistant Attorney General West thanked the collaborative efforts of the Justice Department’s Civil Division, the U.S. Attorney for the District of Massachusetts, the Office of Inspector General of the Department of Health and Human Services, the Food and Drug Administration Office of Criminal Investigations, and the Federal Bureau of Investigation.