Johnson & Johnson: Accused of Buying the Pharmacy’s Recommendation

In the Johnson and Johnson Omnicare kickbacks case, J&J and Janssen agreed to pay $149 million to resolve allegations that they paid a nursing-home pharmacy to promote their drugs. The alleged sales channel ran through consultant pharmacists who reviewed residents’ medical charts and recommended prescriptions to physicians. The manufacturer allegedly paid the pharmacy, and the recommendation reached the doctor as clinical advice. If your work involved the rebates, data contracts or pharmacy programs behind that advice, this case turns on a transaction you may recognize.

The Department of Justice announced the pharmaceutical fraud settlement on November 4, 2013. The Omnicare allegations concerned Risperdal and other J&J drugs. They formed a distinct part of a wider resolution involving different products, subsidiaries and sales practices.

How Do Pharmaceutical Kickbacks Work?

In this case, the alleged pharmaceutical kickbacks bought the institutional pharmacy’s influence over prescribing. Johnson & Johnson and Janssen allegedly paid Omnicare to have its consultant pharmacists promote their drugs in nursing homes. The commercial relationship reached into the clinical recommendation.

The Justice Department described Omnicare at the time as the nation’s largest pharmacy specializing in dispensing drugs to nursing-home patients. Its consultant pharmacists regularly reviewed residents’ medical charts and advised physicians about which drugs to prescribe. That placed the pharmacy inside the treatment decision, with a role extending beyond dispensing the prescription after a doctor wrote it.

According to the government’s account, Johnson & Johnson intended the payments to induce Omnicare and its hundreds of consultant pharmacists to carry out active intervention programs promoting Risperdal and other J&J drugs. The pharmacists purported to make independent recommendations based on clinical judgment. The government alleged that Johnson & Johnson viewed them as an extension of its sales force.

That is the conflict at the center of the case. A nursing-home resident depended on a recommendation made for the resident’s care. The manufacturer allegedly paid to turn the same recommendation toward its own products.

The payment also reached the government’s bill. The Justice Department alleged that the kickbacks caused Omnicare to submit false claims to federal health care programs. J&J and Janssen agreed to pay to resolve that claim.

What the Payments Were Called

The government identified market-share rebates, data-purchase agreements, grants and educational funding in the Johnson & Johnson arrangement. Each described money moving from the manufacturer to the pharmacy. The Justice Department alleged that the money served the same purpose across those descriptions: getting Omnicare to promote J&J drugs.

In the Johnson & Johnson allegations, the market-share payment sat beside a program meant to increase use of the manufacturer’s drugs through pharmacist recommendations.

The data-purchase agreements put another ordinary business activity into the alleged arrangement. For someone working in contracting or finance, the relevant connection is between the agreement describing the purchase and the commercial objective behind the payment. We examine that connection with the insider who understands why the business wanted the arrangement and what it expected Omnicare to do.

Grants and educational funding supplied other payment routes named by the Justice Department. The government alleged that these payments, too, were intended to induce the pharmacy’s promotion programs. An education budget and a sales objective can sit in different parts of a company while serving the same transaction. The person who knows how those decisions were connected can explain something the payment description leaves out.

Omnicare’s Recommendation Business Appeared in Another Case

Omnicare’s separate Amgen kickback settlement, announced in February 2014, involved an alleged program to switch Medicaid patients from a competing drug to Aranesp. It provides a concrete comparison: the pharmacy’s ability to influence drug choice could be the service a manufacturer wanted to buy.

In that case, the government alleged that Omnicare solicited and received payments from Amgen in return for therapeutic interchange programs. Those programs were designed to move patients to Amgen’s product. The alleged payments included performance-based rebates tied to market-share or volume thresholds, alongside grants, speaker fees, consulting services, data fees, dinners and travel.

In both cases, the alleged financial arrangement rewarded the pharmacy’s ability to influence drug choice. The J&J case focused on programs to promote its drugs through consultant pharmacists. The Amgen case described programs intended to switch patients to a particular product.

The Civil Settlements Behind the Johnson & Johnson Headline

The Johnson & Johnson resolution included $1.72 billion in civil settlements over healthcare fraud allegations with the federal government and states. The Omnicare payment addressed the pharmacy channel, while other civil components addressed promotion of Risperdal, Invega and Natrecor.

Omnicare had already paid $98 million in 2009 to settle allegations that it accepted payments from J&J and Janssen, along with other conduct. That earlier settlement covered the recipient’s side and more than this one arrangement. The later manufacturer settlement addressed the companies allegedly paying for the pharmacy’s influence.

Janssen’s Nursing-Home Promotion

The nursing-home market also appeared in the off-label promotion allegations. The Justice Department alleged that Janssen used an ElderCare sales force to market Risperdal for behavioral disturbances in elderly dementia patients. That sales effort and the Omnicare pharmacy relationship reached the same care setting through different people: manufacturer sales representatives and consultant pharmacists.

The scale of the product helps explain the commercial stakes. Public Citizen’s 2018 report, Twenty-Seven Years of Pharmaceutical Industry Criminal and Civil Penalties: 1991 Through 2017, reported $11.7 billion in Risperdal sales during the first twelve years after approval.

Johnson & Johnson’s Corporate Integrity Agreement Reached Executive Pay

Johnson & Johnson also entered a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. The agreement required changes reaching executive compensation, research practices, publication policies and payments to physicians.

Under the terms described by the Justice Department, J&J had to change its compensation program to permit recovery of bonuses and other long-term incentives from covered executives if they or their subordinates engaged in significant misconduct. The provision reached executives still employed and those who had left.

What a Pharmaceutical Whistleblower Can Show

A pharmaceutical whistleblower can connect the payment’s stated purpose to the prescribing influence the manufacturer sought. In the Omnicare allegations, that connection ran through rebate payments, data agreements, grant and education funding, pharmacy promotion programs, recommendations and the claims that followed.

Different people may understand different parts of that relationship. A contracting employee may know what the manufacturer expected in return for its payments. A finance employee may know how the payments were approved and recorded. A pharmacist may know how a promotion program affected recommendations during chart review. We work with the person who can explain the business decision behind the records and connect it to the government-paid drug business.

The civil Johnson & Johnson settlements resolved multiple cases brought under the False Claims Act’s qui tam provisions. The Justice Department announced a $27.7 million whistleblower reward for the Massachusetts whistleblowers from the federal government’s share. That was the award associated with the pharmacy-channel case.

Public Citizen’s report found that whistleblower revelations contributed to 54% of federal pharmaceutical settlements from 1991 through 2017. The J&J case illustrates the business knowledge behind that finding: the person who understands why a pharmacy received a payment can connect a manufacturer’s spending to a decision affecting patients and public money.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Pharmacy Was Paid to Do

If you know how a rebate, data agreement or education payment became a pharmacy recommendation program, speak to one of our whistleblower experts about that connection. We build the case with you, bring in pharmaceutical kickback whistleblower lawyers who understand manufacturer and pharmacy arrangements, and stay alongside you throughout the case.