Drug and healthcare giant Johnson & Johnson (JNJ: Quote) has reached a deal with the federal prosecutors to settle investigations into the company's marketing practices, including that of Risperdal, for as much as $2.2 billion, the Wall Street Journal reported Thursday, citing people familiar with the matter.
The agreed payment includes a roughly $400 million criminal fine for the illegal promotion of the antipsychotic Risperdal. Prosecutors alleged that the medicine was prescribed to control anxiety among patients with dementia and Alzheimer's disease, both unapproved uses. The drug had been J&J's top-selling drug with $2.2 billion in sales in 2007, the year before it lost U.S. patent protection.
The settlement would also resolve investigations into the promotion of another schizophrenia agent Invega and the heart-failure drug Natrecor. It also includes an investigation into whether the company paid tens of millions of dollars in kickbacks to nursing-home pharmacy operator Omnicare Inc. (OCR) to boost sales of certain J&J medicines to nursing home patients, the report noted.
The final payment reportedly will depend on which states suing Johnson & Johnson sign on to the agreement.
While announcing Tuesday a sharp decline in its second-quarter profit, Johnson & Johnson had stated that its results were hurt by 'an increase in the accrual for the potential settlement of previously disclosed civil litigation matters', along with other one-time charges.
The company reportedly marked $611 million in the second quarter to cover potential legal settlements, on top of a $1.1 billion charge taken in last year's fourth quarter.
It is expected that the company would disclose the general outlines in a few weeks, likely when the company files its quarterly financial results with federal securities regulators early next month.
As per the report, the deal would allow Johnson & Johnson to preserve its ability to sell its products to government health programs like Medicare and resolve other lingering investigations in addition to the Risperdal probe.
JNJ shares closed Thursday's regular trading session at $69.53, up $0.16 or 0.23 percent.
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by RTT Staff Writer
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