NEW BRUNSWICK, N.J.
Johnson & Johnson said Friday it will add about $600 million to its reserves to cover a possible settlement of allegations it paid kickbacks to a company that dispenses drugs to nursing homes.
The company said it will take a one-time charge in the second quarter to cover a possible settlement of a whistleblower lawsuit. In 2010, U.S. attorneys joined two lawsuits alleging Johnson & Johnson made improper payments to Omnicare Inc. to get the company to buy more of its schizophrenia drugs Risperdal and Invega and respiratory drug Natrecor, and Omnicare's pharmacists then recommended that doctors prescribe those drugs.
The government says the payments were made from 1999 through 2004. Omnicare's annual sales of Johnson & Johnson drugs climbed from about $100 million a year to $280 million a year over that period. Much of that revenue came from Risperdal. Johnson & Johnson said it gave standard discounts to Omnicare, and that those discounts are not illegal as long as they are properly disclosed.
Omnicare, of Covington, Ky., sells drugs to nursing homes, hospitals, and other long-term care providers. In 2009 it agreed to pay $90 million to the federal government and numerous states in order to resolve an inquiry into its actions.
Shares of Johnson & Johnson rose 18 cents to $62.98 Friday, and lost 6 cents to $62.92 in after-hours trading.