Risperdal Settlement Earns Millions for Whistle-Blowers

Federal agents placed a hidden recording device on Johnson & Johnson (J&J) sales representative Judy Doetterl in 2004, and directed her to tape marketing presentations at a national company sales meeting.

U.S. prosecutors were trying to prove claims that J&J increased sales by encouraging physicians to prescribe its antipsychotic drug Risperdal for uses beyond what is approved to treat.

The government investigated Risperdal for more than nine years before the drug manufacturer, the world’s largest seller of healthcare products, agreed to pay $2.2 billion in a Risperdal settlement to resolve criminal and civil probes, on November 4.

Doetterl, U.S. prosecutors, and other attorneys provided a detailed account of the decade-long probe that ended with eight J&J whistle-blowers each earning more than $20 million.

The U.S. accused J&J of marketing Risperdal, along with two additional drugs, for off-label uses and offered bribes to doctors and pharmacists to increase sales. The manufacturer’s Janssen unit pleaded guilty to misbranding Risperdal. J&J also settled civil lawsuits filed under the False Claims Act, allowing citizens to file sealed complaints on behalf of the government and take a portion of any profits.

Risperdal lawsuits

Doetterl and four other J&J employees filed lawsuits against the company, and will each receive approximately $29 in Risperdal settlements from the U.S. and state governments that allege they overpaid through Medicare or Medicaid as a result of J&J’s practices. Another informant, Allen Jones, was paid $20.3 million in 2012 when the drug manufacturer paid $158 million in a Risperdal settlement with Texas.

Two additional informants who sued J&J over the marketing of the drug, who alleged bribes were made to nursing home pharmacy, Omnicare Inc., will each receive $28 million, according to the Justice Department.

As part of the terms of the settlement, J&J agreed to sign a five-year corporate integrity agreement with the inspector general of the Department of Health and Human Services. According to the company, they’ve also committed to continuously strengthening their compliance programs.

Risperdal allegations

In the civil case, the U.S. claimed that J&J promoted Risperdal for elderly patients and children from 1999 to 2005, neither of which had been approved at the time.

While studies had shown that Risperdal caused an increased risk of strokes in the elderly and diabetes for everyone, the U.S. accused J&J of promoting the drug as safe and effective.

Victoria Starr, a former Janssen sales rep from Oregon, was the first whistle-blower to file a Risperdal lawsuit back in April 2004. This occurred three months after she resigned with the company.

According to her attorney, she became uncomfortable when the company asked her to market the drug as safe for the elderly, when she knew for a fact it was dangerous. She was tasked to encourage elder care facilities to prescribe the drug.

Several other sales reps followed suit shortly after. Their complaints also detailed portions of the Risperdal off-label marketing plan.

The False Claims Act states that the first whistle-blower to file a case should be rewarded, although lawyers for plaintiffs who file lawsuits later often agree to share the profits, which is what happened in the Risperdal settlement.

The major break in the case for the government came in January 2010, when a regional business director who managed 60 sales reps and six managers filed a whistle-blower case, offering additional details on corporate strategy and tactics.

He claimed J&J sought approval from the U.S. Food and Drug Administration to market Risperdal for dementia, but was denied. As the company had spent a great amount of time, money, and energy into its ElderCare sales force, they weren’t willing give up this venture that had the potential to be very profitable.

This whistle-blower entry was essential to the prosecution.

Changes in the medical industry

Drug companies and medical-device manufacturers are now required to publicly disclose any money paid to physicians to inform patients of conflicts of interest that could impact their health. The new regulations took effect this year, as part of President Obama’s Affordable Care Act.

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