Bloomberg News

J&J’s Gorsky Should Be Forced to Testify in Suit, U.S. Says

April 13, 2012

Johnson & Johnson’s recently named Chief Executive Officer Alex Gorsky should be ordered to give sworn testimony in a lawsuit claiming the company paid kickbacks to influence sales of the antipsychotic drug Risperdal to nursing home patients, government lawyers said.

The U.S. sued J&J and two units in January 2010, claiming they paid millions of dollars to induce Omnicare Inc. (OCR:US) to buy and recommend J&J drugs including Risperdal. Justice Department lawyers asked U.S. District Judge Richard Stearns in Boston to compel Gorsky to appear for a deposition for the suit.

Gorsky was named in February to take over April 26 as J&J’s CEO, succeeding Bill Weldon.

Gorsky, who had been vice president of sales and later president of J&J’s Janssen unit, has “relevant knowledge” concerning the division’s marketing to Omnicare, attorneys for the U.S. said in court papers April 11. This includes “knowledge about various allegedly illegal payments that J&J made to induce Omnicare to purchase and recommend Risperdal,” the U.S. said.

The company said it wouldn’t make Gorsky available for a deposition, calling the request “nothing more than a fishing expedition,” according to a March 26 letter sent to the Justice Department. J&J has argued that payments to Omnicare were allowable rebates and not illegal kickbacks.

‘No Reasonable Connection’

“Mr. Gorsky has no reasonable connection to the subject matter of the government’s complaint and was not involved with the facts underlying this case,” attorney Robert D. Keeling, of Sidley & Austin (1119L:US), said in the letter. The request for Gorsky’s testimony “unnecessarily targets -- and thus would unduly harass -- J&J’s top executive.”

While with Janssen, Gorsky “was in a position to know why J&J chose not to inform Omnicare (or members of Janssen’s own sales staff) that, in January 1999, the Food and Drug Administration had warned J&J that marketing Risperdal as safe and effective in the elderly would be false and misleading,” the U.S. said in the April 11 filing.

The company declined to comment because it is pending litigation, Bill Price, a J&J spokesman, said in an e-mail today.

The U.S. claims that from 1999 to 2004, J&J used various forms of kickbacks “including market share rebate payments conditioned on Omnicare engaging in ‘active intervention’ programs for J&J drugs (JNJ:US),” according to its complaint filed in 2010 in federal court in Boston. These payments “were ostensibly for the purchase of Omnicare data, and various ‘grants’ and other payments, all of which J&J intended to induce Omnicare to purchase and to recommend J&J drugs.”

Common Practices

J&J argued it engaged in common commercial practices such as giving customers higher rebates based on the share of a manufacturer’s product (JNJ:US) used and trying to get its drugs on formularies, which are lists of medications that an insurer, public health-care program or other payer will reimburse. J&J didn’t violate the False Claims Act or Anti-Kickback Statute, the company said in court papers.

The Justice Department joined complaints by whistle-blowers Bernard Lisitza and David Kammerer, who sued under the False Claims Act. Stearns dismissed claims by Kammerer last year. Lisitza, a former Omnicare pharmacist, first sued in 2003. Lisitza claims he was fired after complaining about his employer’s switching patients’ prescriptions to J&J drugs.

$98 Million Settlement

Omnicare, based in Covington, Kentucky, agreed in 2009 to pay $98 million to settle civil allegations by the U.S. government and various states that it took kickbacks from J&J. Omnicare didn’t admit liability.

The whistle-blower lawsuit in Boston is one of several against J&J and its Janssen unit over Risperdal marketing.

An Arkansas judge ordered J&J to pay $1.1 billion this week after a jury found company’s officials misled doctors and patients about the risks of the antipsychotic. J&J agreed to pay $158 million in January to settle Texas officials’ claims that the drugmaker fraudulently marketed the drug, ending a trial over the allegations.

A jury in Louisiana, weighing claims that the company downplayed the drug’s risks, awarded that state $257.7 million in 2010. A South Carolina judge last year ordered J&J to pay $327 million over Risperdal sold in the state. Both judgments are on appeal.

2004 Investigation

The U.S. government has been investigating Risperdal sales practices since 2004, including allegations the company marketed the drug for unapproved uses, J&J has said in Securities and Exchange Commission filings (JNJ:US). The company said it has been in negotiations with the U.S. to settle the investigation.

The Justice Department is demanding that J&J pay about $1.8 billion to resolve the civil claims by the U.S. and some states, people familiar with the matter said last month.

J&J, based in New Brunswick, New Jersey, disclosed in August that it reached an agreement to settle a misdemeanor criminal charge related to Risperdal marketing.

The case is U.S. ex re. Lisitza v. Johnson & Johnson (JNJ:US), 07-10288, U.S. District Court, District of Massachusetts (Boston).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


Cash Is for Losers
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • OCR
    (Omnicare Inc)
    • $70.31 USD
    • -0.13
    • -0.18%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus