Late last week, Johnson & Johnson ($JNJ) said it had set aside another $600 million to settle lawsuits and government probes, on top of almost $3 billion in legal charges in 2011. This week, Bloomberg reports that J&J is close to settling with the U.S. Justice Department for up to $2.2 billion. At that amount, the settlement would rank second to Pfizer's ($PFE) $2.3 billion off-label marketing deal from 2009.
The deal would wrap up longstanding probes into J&J's Risperdal marketing practices, plus claims that the company stepped over the line with its marketing of Natrecor for heart failure and Invega, another antipsychotic. And it would wrap up whistleblower suits alleging that J&J engaged in a kickback scheme with the nursing home pharmacy provider Omnicare, to boost sales of not only Risperdal, but also the antibiotic Levaquin and anemia fighter Procrit.
According to Bloomberg, the settlement involves a criminal penalty of up to $600 million, related to an agreed-upon guilty plea to a misdemeanor charge. The rest of the settlement would resolve civil claims, including whistleblower lawsuits. And it would include claims from some U.S. states, but not all of them; Arkansas, Louisiana and South Carolina, for instance, wouldn't be covered. As Bloomberg points out, the company already faces a total of about $1.8 billion in damages and fines in those states. It separately settled Risperdal claims with the state of Texas last year for $158 million.
If J&J does announce a deal with the folks at Justice this week, it will end years upon years of investigations and whistleblower-wrangling. The Justice Department has been looking into Risperdal marketing since 2004, J&J's 2011 annual report says. Last year, the company was said to be close to a $1 billion settlement with the feds, but higher-ups at the Justice Department decided to hold out for more money.
The U.S. government has been aggressively pursuing drugmakers for marketing violations for several years now, and some officials at the Justice Department have said that financial settlements don't appear to be deterring misbehavior. Even an almost-record-breaking $2.2 billion deal amounts to less than 10% of Risperdal's sales over the past decade. As Bloomberg points out, Risperdal brought in around $24 billion in sales since 2003. It fell off patent in 2007.