J&J seeks dismissal of complaint alleging it paid kickbacks to hike drug sales

By Denise Lavoie, AP
Thursday, October 7, 2010

Johnson & Johnson asks judge to toss kickback case

BOSTON — Johnson & Johnson on Thursday asked a federal judge to dismiss a complaint accusing the health care giant of paying millions in kickbacks so nursing homes would put more patients on its popular schizophrenia medication and other drugs.

The government and two whistleblowers allege J&J paid kickbacks for five years to long-term care pharmacy Omnicare Inc., whose pharmacists then recommended that doctors prescribe the schizophrenia drug Risperdal for patients with signs of Alzheimer’s. The drug was later found to increase risk of death in such patients.

U.S. District Judge Richard Stearns heard arguments from lawyers for the government and Johnson & Johnson during morning and afternoon sessions, but did not indicate when he would rule.

J&J, based in New Brunswick, N.J., argued discounts such as those it gave Omnicare are standard industry practice and don’t violate the federal anti-kickback law or similar state laws as long as discounts are properly disclosed.

“It is absolutely clear that there is nothing unreasonable about the interpretation Johnson & Johnson had of the statute,” said William Sarraille, an attorney for Johnson & Johnson.

However, documents filed by the whistleblowers who originally brought the case indicate physicians who were pushed to switch patients from Risperdal to competing drugs were not told Omnicare was getting rebates from J&J.

Assistant District Attorney Gregg Shapiro said the law does not allow “an agreement to attach strings to the discount.”

Shapiro said Omnicare, as a result of its contract with Johnson & Johnson, sent faxes to thousand of doctors asking them to switch their patients to Risperdal. Representatives of Omnicare also visited nursing homes to promote the use of Risperdal, Shapiro said.

“In order to get rebates, you have to go out and push our drugs,” Shapiro described J&J’s contract with Omnicare.

He added the government brought the case because of the “extraordinary amount of money” Johnson & Johnson paid to Omnicare.

Documents from the case indicate J&J’s contracts with Omnicare increased the level of discounts Omnicare received as it boosted the share of Johnson & Johnson drugs nursing home patients got, compared with rival companies’ medicines.

Sarraille said the government has conceded that there is no evidence that any patients were harmed.

The U.S. Attorney’s office in Boston earlier this year joined two whistleblower cases against J&J. One was filed in 2003 by a former Omnicare pharmacist in Chicago, Bernard Lisitza, who says he was fired after he challenged the Risperdal agreements and other practices at the company. The other was filed by former Omnicare financial analyst David Kammerer in 2005, after he resigned from the company.

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

The U.S. Attorney’s Office in Boston is seeking triple damages, restitution and other penalties from Johnson & Johnson under the federal False Claims Act and other laws. The damages would be based on the amount of false claims charged to Medicaid, which paid for about two-thirds of the claims Omnicare submitted for J&J drugs — possibly hundreds of millions of dollars.

The government alleges the scheme went on from 1999 through 2004, a period when J&J’s annual 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; the other drugs sold through Omnicare were pain relievers Duragesic and Ultram and an antibiotic, Levaquin.

Soon after that, the Food and Drug Administration required Risperdal to be sold with its most severe, “black box” warning stating that giving Risperdal and similar drugs to elderly patients with schizophrenia and other mental illnesses related to dementia increased their risk of death.

Legal Affairs Writer Lavoie reported from Boston and Business Writer Johnson reported from Trenton, N.J.

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