Johnson and Johnson 2012 Annual Report Download - page 69

AWP cases brought by various Attorneys General have proceeded to trial against other manufacturers. Several state
cases against certain subsidiaries of Johnson & Johnson have been settled, including Kentucky, which had been set for
trial in January 2012 and Kansas which had been set for trial in March 2013. Louisiana and Mississippi are set for trial in
October 2013, Illinois is set for trial in May 2014, and Alaska is set for trial in July 2014. Other state cases are likely to be
set for trial in due course. In addition, an AWP case against the J&J AWP Defendants brought by the Commonwealth of
Pennsylvania was tried in Commonwealth Court in October and November 2010. The Court found in the
Commonwealth’s favor with regard to certain of its claims under the Pennsylvania Unfair Trade Practices and Consumer
Protection Law (UTPL), entered an injunction, and awarded $45 million in restitution and $6.5 million in civil penalties. The
Court found in the J&J AWP Defendants’ favor on the Commonwealth’s claims of unjust enrichment, misrepresentation/
fraud, civil conspiracy, and on certain of the Commonwealth’s claims under the UTPL. The J&J AWP Defendants have
appealed the Commonwealth Court’s UTPL ruling to the Pennsylvania Supreme Court. The Company believes that the J&J
AWP Defendants have strong arguments supporting their appeal. Because the Company believes that the potential for an
unfavorable outcome is not probable, it has not established an accrual with respect to the verdict.
RISPERDAL®
In January 2004, Janssen Pharmaceutica Inc. (Janssen Pharmaceutica) (now Janssen Pharmaceuticals, Inc. (JPI)) received
a subpoena from the Office of the Inspector General of the United States Office of Personnel Management seeking
documents concerning sales and marketing of, any and all payments to physicians in connection with sales and marketing
of, and clinical trials for, RISPERDAL®from 1997 to 2002. Documents subsequent to 2002 have also been requested by
the Department of Justice. An additional subpoena seeking information about marketing of, and adverse reactions to,
RISPERDAL®was received from the United States Attorney’s Office for the Eastern District of Pennsylvania in
November 2005. Numerous subpoenas seeking testimony from various witnesses before a grand jury were also received.
JPI cooperated in responding to these requests for documents and witnesses. The United States Department of Justice
and the United States Attorney’s Office for the Eastern District of Pennsylvania (the Government) are continuing to actively
pursue both criminal and civil actions. In February 2010, the Government served Civil Investigative Demands seeking
additional information relating to sales and marketing of RISPERDAL®and sales and marketing of INVEGA®. The focus of
these matters is the alleged promotion of RISPERDAL®and INVEGA®for off-label uses. The Government has notified JPI
that there are also pending qui tam actions alleging off-label promotion of RISPERDAL®. The Government informed JPI
that it will intervene in these qui tam actions and file a superseding complaint.
In 2011, discussions to resolve criminal penalties under the Food Drug and Cosmetic Act related to the promotion of
RISPERDAL®resulted in an agreement in principle with the United States Attorney’s Office for the Eastern District of
Pennsylvania on key issues relevant to a disposition of criminal charges pursuant to a single misdemeanor violation of the
Food Drug and Cosmetic Act, but certain issues remain open before a settlement can be finalized. During 2011, the
Company accrued amounts to cover the financial component of the proposed criminal settlement.
In 2012, the Company also reached an agreement in principle with the United States Department of Justice to settle three
pending civil False Claims Act matters that are pending in (1) the Eastern District of Pennsylvania concerning sales and
marketing of RISPERDAL®and INVEGA®; (2) the Northern District of California regarding the sales and marketing of
NATRECOR®, discussed separately below; and (3) the District of Massachusetts alleging that the defendants provided
the Omnicare, Inc. (Omnicare) long-term care pharmacy with rebates and other payments regarding RISPERDAL®and
other products, discussed separately below. Assuming these agreements are finalized, they will resolve the federal
government’s claims under the Federal False Claims Act, resolve all pending state and federal government litigation
regarding Omnicare and NATRECOR®, and settle the RISPERDAL®Medicaid-related claims for those states that opt into
the settlement. With the tentative settlement agreements described above, issues remain open that must be resolved
before the settlements can be finalized.
The Company has accrued amounts, including an additional accrual made in the second quarter of 2012, to cover these
tentative settlement agreements. However, the settlements will not resolve all pending state litigation matters regarding
RISPERDAL®, and some states may elect to opt out of the settlements. To the extent any state has a claim and has or will
elect to opt out of these settlements, the Company has accrued an amount equal to what that state would receive if it was
participating in the settlements. Among other states, Arkansas, Louisiana and South Carolina are not expected to
participate in the settlements (as discussed below). Because the Company believes there are strong arguments on appeal
in those cases, the Company has only accrued an amount equal to what these states would receive if they participated in
the settlements.
In addition, the Attorneys General of multiple states, including Alaska, Arkansas, Louisiana, Massachusetts, Mississippi,
Montana, New Mexico, South Carolina and Utah, have pending actions against Janssen Pharmaceutica (now JPI) seeking
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