Earlier this week, the U.S. Department of Justice (DOJ) announced that it reached a settlement with Johnson & Johnson (J&J) and two of its subsidiaries — Janssen Pharmaceuticals and Scios Inc. — to resolve civil and criminal health care fraud allegations. The settlement in principle was first announced by J&J in an U.S. Securities and Exchange Commission (SEC) filing over a year ago. The $2.2 billion global resolution, which resolves four whistleblower complaints, includes criminal fines and forfeiture totaling $485 million and civil settlements with federal and state governments totaling $1.72 billion.
The government’s allegations included promoting Risperdal, Invega and Natrecor for uses not approved by the U.S. Food and Drug Administration (FDA) and paying kickbacks to Omnicare Inc., the largest long-term care pharmacy in the U.S., in the form of market share rebates, data-purchase agreements, grants and educational funding. Omnicare reached a settlement in 2009 to resolve allegations that it received kickbacks from J&J, among other things.
As part of the settlement, Janssen pled guilty to one misdemeanor count of misbranding in violation of the federal Food, Drug, and Cosmetic Act (FDCA) related to the off-label promotion of Risperdal. Interestingly, Scios previously pled guilty to one misdemeanor count of misbranding related to the off-label promotion of Natrecor.
J&J also entered into a five year corporate integrity agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (OIG). In addition to J&J, the CIA covers “Janssen and all pharmaceutical subsidiaries and affiliates of J&J, and all other pharmaceutical entities that are majority owned or controlled, directly or indirectly, by J&J that market, sell, contract for, distribute, conduct research relating to, and/or promote Government Reimbursed Products (as defined in Section II.C.4 [of the CIA]). As of the Effective Date, the term J&J Pharmaceutical Affiliates shall include, but not be limited to, the following entities: Janssen, Patriot Pharmaceuticals, Inc., Janssen Biotech, Inc. (including its Janssen Therapeutics division), Scios, Inc., Janssen Research and Development LLC, Johnson & Johnson Health Care Systems Inc., and JOM Pharmaceutical Services, Inc.” This CIA supersedes the April 2010 Janssen CIA.
To assist with implementation of the CIA and compliance oversight responsibilities, the 101-page CIA requires two compliance officer positions to be maintained, one for J&J and one for the J&J affiliates. Further, the CIA imposes Board of Director oversight responsibilities for J&J and requires a J&J Pharmaceutical Group North American Leadership Team (NALT) to review and oversee compliance matters related to the J&J affiliates. The CIA also includes several compliance requirements that we have seen in other recent CIAs, including management accountability and certifications, implementation of a risk assessment and mitigation program, and implementation of an executive recoupment program.