Johnson & Johnson close to settling over Risperdal marketing; SEC probes Teva

US health care giant Johnson & Johnson (NYSE: JNJ) has reached “an agreement in principle’’ with the Justice Department to settle claims it inappropriately marketed its anti-psychotic drug Risperdal (risperidone), the company revealed in a filing with the US Securities and Exchange Commission last week.

The tentative settlement would also resolve claims brought by authorities in the states of California and Massachusetts that the company’s subsidiary, Janssen Pharmaceuticals, inappropriately marketed Invega (paliperidone), for congestive heart failure, and Natrecor (nesiritide) for the treatment of schizophrenia. According to previous reports by the Wall Street Journal and Bloomberg, J&J is expected to pay as much as $2.2 billion to settle the government investigations.

J&J said in the SEC filing that it 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. Because J&J 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.