So much for Johnson & Johnson's squeaky clean image.

The pharmaceutical giant and two subsidiaries will pay more than $2.2 billion to resolve criminal and civil liability for promoting off-label uses of three drugs and paying kickbacks to physicians.

The resolution, announced Monday morning by the Department of Justice, is touted as one of the largest health care fraud settlements in U.S. history, with criminal fines and forfeiture totaling $485 million and civil settlements with the federal government and states totaling $1.72 billion. The resolution also subjects J&J to a Corporate Integrity Agreement with the Department of Health and Human Services' Office of Inspector General.

In court documents filed Monday in the Eastern District of Pennsylvania, the government charged that, from March 3, 2002, through Dec. 31, 2003, Janssen Pharmaceuticals, a J&J subsidiary, promoted the anti-psychotic drug Risperdal for an unapproved uses. Although approved only to treat schizophrenia, sales representatives promoted it to doctors treating elderly dementia as a medication for anxiety, agitation, depression, hostility, and confusion. It is alleged that the company created written sales materials that emphasized these symptoms and minimized any mention of the FDA-approved use for treating schizophrenia. The company also provided incentives for off-label promotion basing sales representatives' bonuses on total sales of Risperdal in their territory, not just sales for FDA-approved uses.

A related civil complaint, filed in the Eastern District of Pennsylvania, charges that J&J and Janssen caused false claims to be submitted to federal health care programs by promoting the drug for off-label uses, making false and misleading statements about safety and efficacy, and paying kickbacks to physicians.

The FDA repeatedly advised Janssen that marketing Risperdal as safe and effective for the elderly would be “misleading.” Despite those warnings, from 1999 through 2005, Janssen aggressively marketed it for use with dementia patients through an “ElderCare sales force” that targeted nursing homes and doctors who treated the elderly. J&J and Janssen, aware of health risks for the elderly, including strokes and diabetes, downplayed them.

The drug was also promoted for use by children and individuals with mental disabilities, despite known health risks to them as well. Until late 2006, Risperdal was not approved for use in children for any purpose, and the FDA repeatedly warned the company against promoting it for any. Nevertheless, speaker fees were paid to doctors as encouragement to write prescriptions for it. Sales representatives allegedly told doctors that if they wanted to receive payments for speaking, they needed to increase their Risperdal prescriptions.

The settlement also resolves allegations relating to Invega, an antipsychotic drug sold by Janssen and similarly marketed for off-label uses.

The settlement resolves allegations that J&J and Janssen paid kickbacks to Omnicare Inc., the nation's largest pharmacy specializing in dispensing drugs to nursing home patients. A complaint filed in the District of Massachusetts in January 2010 alleged that J&J paid millions of dollars to Omnicare under the guise of market share rebate payments, data-purchase agreements, “grants” and “educational funding,” in exchange for prescribing Risperdal.

Also resolved in the civil settlement are allegations that J&J and another subsidiary, Scios Inc., caused fraudulent claims to be submitted to federal health care programs for the heart failure drug Natrecor. In 2001, the FDA approved Natrecor to treat patients with acute congestive heart failure experiencing shortness of breath. Scios later launched an aggressive campaign to market the drug for patients with less severe heart failure, a non-approved use.

In addition to the criminal and civil resolutions, J&J has executed a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).

The CIA requires J&J to change its executive compensation program to permit the company to clawback annual bonuses and other long-term incentives from executives if they, or subordinates, engage in significant misconduct. The clawback applies to both current and former executives. It also requires J&J's pharmaceutical businesses “to implement and maintain transparency” regarding research practices, publication policies, and payments to physicians.” On an annual basis, senior executives and members of its board of directors must certify compliance with provisions of the CIA and submit detailed annual reports to HHS-OIG about its compliance program.

The civil settlements resolve lawsuits filed under the whistleblower provisions of the False Claims Act. Whistleblowers in Pennsylvania will receive $112 million for the information they provided, whistleblowers in Massachusetts will receive $27.7 million, and a whistleblower in the Northern District of California will receive $28 million.

In a statement, J&J stressed that it has cooperated with the government since the investigations began nearly a decade ago, and today's agreements resolve all related federal criminal and federal civil liabilities on these matters.  Janssen accepts accountability for the actions described in the misdemeanor plea, and the settlement of the civil allegations is not an admission of any liability or wrongdoing, and that the company expressly denies the government's civil allegations.   

“Today we reached closure on complex legal matters spanning almost a decade.  This resolution allows us to move forward and continue to focus on delivering innovative solutions that improve and enhance the health and well-being of patients around the world,” said Michael Ullmann, vice president and general counsel for J&J. “We remain committed to working with the U.S. Food and Drug Administration and others to ensure greater clarity around the guidance for pharmaceutical industry practices and standards.”

Court documents related to the settlement can be viewed here.