J&J to Record $600 Million Charge Tied to Outstanding Lawsuits
First Published Friday, 8th June 2012 09:48 pm - © 2012 Dow Jones
By Ben Fox Rubin
Johnson & Johnson (JNJ) said it plans to record a special charge of roughly $600 million in its second quarter to increase its accrual for potential legal settlements, as it has faced a series of lawsuits over accusations of bribery and improper drug-marketing practices.
The company said the settlement payments stem for a series of outstanding civil cases that involve its drugs Risperdal, Invega and Natrecor, as well as nursing-home pharmacy operator Omnicare Inc. (OCR).
The health-care products company has faced lawsuits related to alleged off-label promotion of its antipsychotic treatment Risperdal, which was once J&J's top-selling drug before generic copycats hit the market, as well as legal challenges over off-label promotion of another schizophrenia treatment, Invega, and the heart-failure drug Natrecor.
Furthermore, the federal government is suing J&J, accusing it of paying kickbacks to induce Omnicare to encourage use of Risperdal and other J&J drugs.
In addition, J&J has dealt with state lawsuits regarding its promotion of Risperdal, including an Arkansas case in which the company in April was ordered to pay $1.2 billion after a jury found that J&J's past marketing of the drug violated the state's consumer-protection laws. J&J previously was ordered to pay $327 million in a South Carolina case and $258 million in Louisiana. The company is appealing all three cases.
In January, J&J agreed to settle a Texas case for $158 million.
Meanwhile, the company agreed to pay an $85 million fine in a criminal case regarding off-label marketing of Natrecor. Parallel civil litigation still hasn't been settled.
The company in April said its first-quarter earnings rose on a foreign-exchange-related gain tied to an acquisition and lower expenses.
Shares closed Friday at $62.98 and were unchanged after hours. The stock is down 4% so far this year.
Write to Ben Fox Rubin at firstname.lastname@example.org