J&J to pay $181 million to settle improper marketing claims

Thu Aug 30, 2012 1:14pm EDT

(Reuters) - Johnson & Johnson (JNJ.N) said it has agreed to pay $181 million to resolve consumer fraud claims by 36 U.S. states and the District of Columbia that it improperly marketed its Risperdal antipsychotic drug for unapproved uses.

The diversified healthcare company, which has also been targeted by federal authorities for separate but related allegations, said it had already set aside funds to cover the civil settlement. The funds will be divided among the states participating in the agreement announced on Thursday.

The company said the settlement was not an admission of wrongdoing.

"We have chosen this path to achieve a prompt and full resolution of these state claims," Michael Yang, president of J&J's Janssen Pharmaceuticals, said in a statement.

Annual sales of Risperdal, which exceeded $4 billion at their peak, have dwindled in the face of competition from cheaper generic versions.

J&J said it would not promote any of its newer antipsychotics for off-label uses or make any false or misleading claims related to those products. It said it had a system in place to ensure that marketing and promotion policies are followed.

While doctors are free to use medicines in any way they see fit, companies can only promote drugs for uses approved by the U.S. Food and Drug Administration.

J&J previously disclosed an agreement in principle with the U.S. Department of Justice to settle three civil False Claims Act matters pending in U.S. courts involving sales and marketing of Risperdal, another schizophrenia treatment Invega, and the heart failure drug Natrecor. J&J has been accused of targeting the elderly by making payments to Omnicare Inc (OCR.N) to promote the medicines in nursing homes and long-term care facilities.

J&J took a charge of about $600 million in the second quarter to bolster reserves for a potential settlement of civil lawsuits related to marketing of Risperdal and other drugs.

J&J shares were down 32 cents, or 0.5 percent, at $67.05 in afternoon trade on the New York Stock Exchange.

(Reporting by Bill Berkrot and Ransdell Pierson; Editing by John Wallace, Bernard Orr)

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