In its largest-ever settlement of a Medicaid fraud case, the state of Indiana will receive nearly $17 million from Johnson & Johnson and its subsidiaries to resolve lawsuits alleging the pharmaceutical manufacturer engaged in illegal off-label marketing and payment of kickbacks to promote its drugs Risperdal and Invega, among others.

The repayment by Johnson & Johnson and its subsidiaries to the Indiana Medicaid program is part of a larger $2.2 billion settlement reached with other states and the federal government for J&J’s alleged defrauding of the Medicaid, Medicare and other healthcare programs, by causing false claims to be submitted for reimbursement and then paid.

The global settlement resolves four separate whistleblower lawsuits in federal court in Pennsylvania under the False Claims Act and one in federal court in Massachusetts alleging violations of the Anti-Kickback Statute. J&J also will plead guilty to a federal criminal charge of drug misbranding.

“Through the help of whistleblowers who used the False Claims Act to expose illegal billings and stop fraud against the Medicaid program, our state will recover a record amount from a drug company to reimburse Indiana for tax dollars wrongly paid out,” Indiana Attorney General Greg Zoeller said.

The Attorney General’s Medicaid Fraud Control Unit or MFCU investigates fraudulent claims against Medicaid, the state-federal medical program for low income Hoosiers that covers costs of many types of prescription drugs. Prior to today’s settlement, the Attorney General’s Office since January 2009 had recovered nearly $37 million in settlements with drug companies for illegal off-label marketing and returned it to the Indiana Medicaid program.

The settlement with Johnson & Johnson involves multiple settlement payments:

• In the Pennsylvania cases, Indiana will receive $12.6 million to resolve allegations that J&J subsidiary Janssen Pharmaceuticals illegally marketed the drug Risperdal from 1999 to 2005, and that another subsidiary, Ortho-McNeil-Janssen, illegally marketed Invega, a drug that replaced Risperdal, from 2007 to 2009.
• In the Massachusetts case, Indiana will receive $4.35 million, plus the costs of bringing the suit, to resolve allegations that Johnson & Johnson paid illegal kickbacks or other illegal remuneration to Omnicare Inc., a long-term pharmacy, for promotion of Risperdal and other drugs, which caused Omnicare to submit false claims to the Indiana Medicaid program for reimbursement.

In total, the Indiana Medicaid program will receive $16.9 million for its state share of the settlements of the two sets of cases – the largest amount Indiana has received in such a settlement in an illegal drug-marketing case. When the federal recovery specific to Indiana included, the two settlements total $44.5 million in combined federal and state money for the Indiana Medicaid program, the largest such amount the program has received.

Risperdal is a drug approved to treat certain symptoms in patients with mental disorders, such as schizophrenia and bipolar disorder. Invega is the drug that replaced Risperdal when it went off-patent. While it is not illegal for physicians to prescribe drugs for uses other than those FDA has approved, it is illegal for drug manufacturers to promote or market their drugs for unapproved uses. The lawsuits allege the J&J companies engaged in a pattern of paying illegal remuneration to physicians and long-term care pharmacies to induce them to promote Risperdal and other J&J drugs – instead of generic drugs at lower cost – for uses for which the drugs were not proven safe and effective, such as for pediatric patients or elderly patients suffering from dementia.

The drug manufacturer also will plead guilty to a criminal charge of drug misbranding the U.S. Department of Justice filed. Whistleblowers who originally brought the lawsuits that the states and federal government joined will receive various percentages of the recovery.

Today’s $16.9 million settlement boosts the Attorney General’s state-level recovery of Medicaid funds through settlements of lawsuits against drug companies to nearly $54 million since January 2009.

“This record recovery helps restore funds to the Indiana Medicaid program, but it is extremely disappointing to see a drug company overbilling and wrongly billing the Medicaid program for ineligible claims. Now J&J must face the legal consequences,” Zoeller said. He thanked the Medicaid Fraud Control Unit and Deputy Attorney General Lawrence Carcare for many months of effort on the J&J investigation and settlement.

Fraud against the Medicaid program can be reported to the Attorney General’s Office at 1-800-382-1039.