July 13th, 2011
J&J Faces Misdemeanor For Natrecor Marketing
Federal prosecutors have charged the Johnson & Johnson Scios unit with mislabeling the acute heart failure drug Natrecor. In a filing in federal court in California, the feds say labeling “lacked adequate directions for use” between 2001 and 2005. J&J was charged with a single misdemeanor and faces a fine of $200,000, or twice the gain from unlawful conduct.
The move comes nearly two years after prosecutors began considering whether to indict J&J over Natrecor marketing. At the time, there was speculation that J&J could face a felony conviction that would generated a much larger fine and exclusion from Medicare and Medicaid. Moreover, several former Scios execs had reportedly lawyered up (back story).
The feds grew interested after a former Scios employee filed a whistleblower lawsuit accusing Scios execs of conducting a campaign to promote Natrecor for chronic heart conditions. The suit claimed sales reps were instructed to discuss benefits with docs, Scios created seminars to discuss off-label benefits and a consultant was hired to create reimbursement guides for docs to bill Medicare for off-label use (here is the lawsuit).
Separately, reports surfaced in 2005 that repeated use of the drug caused dangerous side effects, prompting Medicare to cease reimbursement for Natrecor outside hospitals. The Justice Department, meanwhile, initiated a criminal probe and joined the whistleblower lawsuit. However, the suit was dismissed two years ago, although without prejudice, indicating further action could be taken.
Of course, a misdemeanor is not to be taken lightly, but the potential for a $200,000 penalty is a mere pittance for the healthcare giant. By now, considerably more has been spent on legal expenses. And the extent to which this amount would be considered a good return on the time spent by the government is unlikely. We have reached out to the US Attorney in California and the lawyer for the whistleblower for comment, and will update you accordingly. UPDATE: A spokesman for the US Attorney declined to comment. And a J&J spokesman writes us to say “the parties have reached an agreement, which is pending approval by the court.”