The Burrill Report

After drawn-out negotiations, Johnson & Johnson has agreed to pay $2.2 billion to settle a series of federal government probes regarding the company’s marketing of its antipsychotic drug Risperdal and some other medications. The deal, which includes a misdemeanor plea and a $600 million criminal penalty, is the second-largest settlement reached by a drugmaker with the government. The only larger agreement is Pfizer’s $2.3 billion settlement for illegal marketing of four of its drugs, including the painkiller Bextra. The J&J settlement will also resolve charges that the company illegally marketed its Netrecor heart medicine and its Invega antipsychotic and a widely publicized whistleblower case in which J&J was accused of paying kickbacks to the Omnicare nursing home pharmacy to boost Risperdal prescribing.

Shares of Forest Laboratories fell after the company announced that it would slash its yearly earnings forecast, due in large part to deteriorating sales of its antidepressant Lexapro. Forest cut its projected profits to a range of 65 cents to 80 cents per share from 95 cents to $1.10 per share. The company anticipates that annual sales of Lexapro will be about $35 million less than it had expected, while its share of revenue from a generic version of Lexapro will be around $55 million less than expected. Lexapro has been one of Forest’s best-selling drugs, but the drug lost its patents in March, opening the door for generic competition. Other companies began selling generic versions at less than half the price of brand-name Lexapro. Forest’s shares are down 3.5 percent since the announcement.

Roche’s new melanoma drug Zelboraf has been rejected by the National Institute for Health and Clinical Excellence, Britain’s healthcare cost agency. NICE said that though Zelboraf was effective for melanoma patients with a particular genetic mutation, its longer-term effect on survival was uncertain. As a result, the agency said it could not recommend the drug as a cost-effective treatment for the deadliest form of skin cancer. This decision came in spite of Roche’s price discount for the drug. Zelboraf’s list price for a week’s supply runs at about $2,700. In response to the decision, Roche’s U.K. managing director, John Melville said, “Zelboraf ticks all the boxes when considering the types of medicines that value-based pricing aims to encourage pharmaceutical companies to develop.”

Lundbeck said it will cut around 600 jobs in its commercial operations in Europe as a means of reducing costs. The company will book a restructuring charge of up to $84.6 million as a consequence of the cuts. Lundbeck said the job cuts are being taken to mitigate the increased pressure from healthcare reforms, generic competition and uncertainty regarding pricing and reimbursement in Europe. Though the restructuring costs are uncertain, CEO Ulf Wiinberg said that the company was maintaining its previous guidance for 2012.

The U.S. Food and Drug Administration delayed its decision on whether to approve Gilead’s Truvada, the first pill shown to prevent HIV infection. In May, a panel of experts recommended that the FDA approve the daily pill for healthy people who are at high risk of contracting HIV, but the agency decided it will need three more months to review its application for Truvada after Gilead submitted updated information on its planned safety materials for patients and doctors using the drug.


June 15, 2012
http://www.burrillreport.com/article-johnson_johnson_reaches_2_2_billion_settlement_with_government_over_marketing_probes.html