J&J Unit Agrees to $85 Million Fine for Misbranding Drug

Johnson & Johnson (JNJ)’s Scios unit agreed to pay an $85 million fine and plead guilty to misbranding the heart drug Natrecor, the U.S. said.

Scios was charged in July with misbranding the medicine because its labeling lacked adequate directions for use. Under a plea agreement reached after months of negotiation with prosecutors, Scios will be placed under organizational probation for three years in addition to paying the fine, Assistant U.S. Attorney Jonathan Schmidt said in a filing today in federal court in San Francisco. A hearing is scheduled for Sept. 28.

The U.S. agreed not to prosecute Scios or Johnson & Johnson for other offenses related to the marketing and sale of Natrecor, according to the filing. That exemption doesn’t apply to False Claims Act liability, according to the filing.

The Justice Department charged Scios Inc. with a “single misdemeanor violation of the Food, Drug and Cosmetic Act” and the agreement is “pending approval by the court,” Shaun Mickus, a spokesman for New Brunswick, New Jersey-based Johnson & Johnson, said in an e-mailed statement. He declined to comment further.

Natrecor, given intravenously, was one of the first drugs for congestive heart failure when it was approved in 2001, and in 2004 it generated $230 million in revenue. Sales plummeted to less than $100 million in 2006 after reviews of its use in less than 1,000 patients tied the medicine to worsening kidney function and higher death rates.

Study Last Year

A Johnson & Johnson study reported last year at the American Heart Association meeting in Chicago found the drug to be safe, and that it slightly improved shortness of breath, a symptom of worsening heart failure. The benefit, though, didn’t last, the study found.

The plea agreement doesn’t release Johnson & Johnson from claims brought by the Justice Department in a separate pending civil suit, according to today’s filing.

In that False Claims Act case, the U.S. alleges Johnson & Johnson illegally marketed Natrecor for off-label “serial outpatient infusions” not approved by the Food and Drug Administration. The practice led to the submission of false claims, costing the government-run health insurance program Medicare “substantial amounts,” according to the complaint, which was filed in federal court in San Francisco.

Last month, Johnson & Johnson reached an agreement to settle a misdemeanor federal criminal charge related to marketing of its antipsychotic drug Risperdal, according to a regulatory filing.

The criminal case is U.S. v. Scios, 11-cr-461, U.S. District Court, Northern District of California (San Francisco). The civil case is Strom v. Scios, 05-3004, U.S. District Court, Northern District of California (San Francisco).

To contact the reporters on this story: Karen Gullo in San Francisco federal court at kgullo@bloomberg.net. Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net;

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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