Johnson & Johnson to Operate Under Corporate Integrity Agreement

In an earlier blog, I reviewed how the U.S. Department of Justice (DOJ) hit Johnson & Johnson with major allegations relating to the prescription drugs Risperdal, Invega, and Natrecor. The company agreed to a settlement resolution, which includes criminal fines and forfeiture totaling $485 million and civil settlements totaling $1.72 billion.

This was the largest healthcare fraud settlement in U.S. history, arising out of multiple investigations of Johnson & Johnson and its subsidiaries. The allegations included promoting the drugs for uses not approved by the Food and Drug Administration, and payment of kickbacks to physicians and a long-term care pharmacy provider.

Besides criminal and civil resolutions, J&J agreed to a five year “probation” period. The company will operate under a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General. J&J must make major changes to the way its pharmaceutical affiliates operate.

According to the November DOJ press release, the Corporate Integrity Agreement requires:

• J&J to change its executive compensation program to allow the company to take back annual bonuses and other long-term incentives from executives if they, or their subordinates, engage in significant misconduct;
• J&J’s pharmaceutical businesses to implement and maintain transparency regarding their research practices, publication policies, and payments to physicians;
• On an annual basis, management employees, including senior executives and certain members of J&J’s independent board of directors, must certify compliance with provisions of the agreement; and
• J&J must submit detailed annual reports to the federal government about its compliance program and its business operations.

The DOJ says the compliance agreements are designed to increase individual accountability for board members, executives, management, and sales reps. The monitoring and reporting provisions are intended to help protect the public from future unlawful and potentially harmful practices.