In its first response to federal claims that it paid kickbacks to boost sales of Risperdal and other meds, Johnson & Johnson said that it was only paying perfectly legal rebates–and that the government’s suit should be dismissed. “This case is a remarkable attempt to attack common discounting arrangements that are expressly protected under federal and state law,” J&J’s lawyers contend.

The Justice Department went after the pharma giant for allegedly paying millions of dollars to persuade Omnicare, a nursing-home pharmacy, to recommend J&J drugs to its nursing home clients. Among the drugs J&J was pushing was Risperdal, an atypical antipsychotic. For its part, Omnicare settled federal claims that it took kickbacks from J&J, but it didn’t admit wrongdoing as part of that deal.

At issue are market share rebates J&J paid to Omnicare; the company says in its legal response that such rebates are “standard industry practice and absolutely essential to our health care system,” Bloomberg reports. However, the government deems the payments “kickbacks” and says the money wrongly influenced healthcare providers.

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The Massachusetts attorney general joined that federal lawsuit accusing Johnson & Johnson of paying kickbacks to push the antipsychotic Risperdal and other drugs into nursing homes. AG Martha Coakley didn’t stop there; however, her office is also investigating other companies that market antipsychotics to nursing homes in the state.

At issue is whether drug companies are touting antipsychotic drugs for unapproved uses, such as dementia. The FDA has warned that use of the atypical antipsychotics in elderly dementia patients can increase the risk of death. “The inappropriate off-label marketing of antipsychotic drugs to nursing homes is a significant health and safety issue for our seniors,” Coakley says in a statement released by her office (as quoted by the Boston Globe). “We have taken strong action on this issue in the past and are continuing to monitor it very closely moving forward.”

The federal lawsuit was filed in January by the U.S. attorney in Boston. It alleges that J&J paid millions of dollars to nursing-home pharmacy provider Omnicare, which in turn would incentivize nursing homes to buy Risperdal. Sales of J&J products to Omnicare almost tripled during that time, to $280 million from $100 million, the suit claims. J&J denies any wrongdoing. Spokeswoman Carol Goodrich told the Globe that “airing the facts will confirm that our conduct, including rebating programs like those the government now challenges, was lawful and appropriate.”

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Some newly released court documents suggest that Johnson & Johnson was leaning heavily on the geriatric market to boost sales of its atypical antipsychotic Risperdal at a time when federal regulators were warning the company against claiming the drug was safe and effective in elderly patients, Bloomberg reports.

The documents, made public after Bloomberg asked a judge to unseal them, show that J&J was pushing to expand use of the drug beyond its schizophrenia indication. “Schizophrenia represents only 35 percent” of antipsychotic scrips, one executive at J&J subsidiary Janssen wrote in an internal report. “Aggressive expansion of Risperdal use in other indications is therefore mandatory.”

Based on its review of the documents, Bloomberg reports that the company tried to sell Risperdal for a variety of off-label uses, including dementia, an indication for which the drug was never approved. Janssen expanded its geriatric sales force almost threefold during that time. And despite nominal prohibitions against talking about unapproved uses, at least some doctors paid to speak on Risperdal’s behalf didn’t adhere to that policy. “I always plant a shill because if I get asked a question from the audiencee, I can then speak off-label,” one such doctor told the company.

As usual in these cases of big document dumps, there’s a legitimate question of “cherry-picking” the best–or worst–examples from all those pages. A J&J spokesman tells Bloomberg that the Lousiana case that spawned these documents “should be decided on the body of evidence … not on the basis of excerpts from documents.”

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How tough was 2009?

Consistent, reliable Johnson & Johnson — cited as a model of smart diversification by Pfizer’s CEO, among others — saw its sales fall for the year. It was the first time in 76 years that J&J reported an annual sales decline, CEO Bill Weldon said, according to a live blog from Dow Jones Newswires.

Total sales fell from $63.75 billion in 2008 to $61.9 billion in 2009, according to results the company released today.

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J&J’s prescription business was hit hard by generic competition for some of its big brands, including Risperdal and Topamax — a problem facing lots of major drug makers.

On top of that, Weldon said the industry is facing a wide range of pressures, including a shift in consumer buying to private-label products, less willingness to undergo elective surgery or buy contact lenses and diabetes-test strips, pressure on hospital budgets, and persistent unemployment.

Still, fourth-quarter sales did rise compared with the year-earlier period — to $16.55 billion, up from $15.18 billion. And Weldon said he expects the global health-care market to grow by 5% a year for the next five years, reaching $7 trillion by 2014.

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The feds say J&J paid kickbacks to a big nursing-home pharmacy company to get the company to prescribe more of its drugs, including the antipsychotic Risperdal.

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The allegation isn’t a huge surprise: The pharmacy company, Omnicare, paid $98 million last year to settle allegations that it had solicited and received kickbacks from J&J in exchange recommending the company’s antipsychotic drug Risperdal.

J&J told the WSJ today that “airing the facts will confirm that our conduct, including rebating programs like those the government now challenges, was lawful and appropriate.”

As we noted when the Omnicare settlement was announced, the story of nursing-home patients getting antipsychotics is long and thorny.

Risperdal, like many other psychotics, raises the risk of death in patients with psychosis that stems from dementia, and isn’t approved to treat this form of psychosis. Nevertheless, the drugs have been widely prescribed to nursing-home patients with dementia, as the WSJ reported back in 2007.

J&J isn’t the only company that’s been accused of wrongdoing in this market. Eli Lilly used a “5 at 5″ slogan to promote the antipsychotic Zyprexa’s side effect of sedation to nursing-home doctors, according to the Department of Justice: 5 milligrams of the drug at 5 p.m. would help patients sleep.

Eli Lilly paid a $1.42 billion settlement and pleaded guilty to a misdemeanor as part of a broad DOJ inquiry into the way the company marketed Zyprexa.

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More proof that FDA warnings make a difference: Alerts about the risks of antipsychotic drugs appear to have depressed sales by some 19 percent, a new Archives of Internal Medicine study finds. “We concluded that it resulted in a modest reduction,” researcher Dr. Ray Dorsey of the University of Rochester Medical Center says. Why modest? In part because antipsychotic scrips still accounted for 9 percent of prescriptions in the elderly in 2008.

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Studies have shown that atypical antipsychotics–which include such best-selling drugs as Eli Lilly’s Zyprexa and Johnson & Johnson’s Risperdal–carry various safety risks, and the FDA has added strong warnings to the drugs’ labeling. This study looks at a warning that the atypicals boost the risk of death in elderly people with dementia; that “black box” was added to the meds in 2005.

The researchers analyzed data on the use of those drugs from January 2003 to December 2008, finding that 19 percent decline in sales. But the group didn’t have data on how many people might have benefited from the warning, Reuters reports. Nor did the researchers want to characterize the FDA’s warning as a success or failure. “It’s hard to say whether 20 percent is the right number,” Dorsey tells the news service.

A commentary accompanying the study, however, posits that regulatory warnings about the atypical antipsychotics have had little effect on prescription numbers. “There’s a real disconnect between the evidence and the prescribing patterns,” co-author Becky A. Briesacher, associate professor at the University of Massachusetts Medical School in Worcester, tells HealthDay. Some geriatric doctors said that sometimes the benefits outweigh those risks. “The only medications that have been shown to work are antipsychotics, but the problem is they have side effects,” says Dr. Davangere Devanand of the New York State Psychiatric Institute. “It’s a balance.”

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Dainippon Sumitomo has filed for FDA approval of its prospective blockbuster schizophrenia drug lurasidone, beating its own timetable as the Japanese pharma giant stays on course toward an expected 2011 market launch.

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Dainippon was willing to spend $2.6 billion for Sepracor last fall, at least in part because it plans to deploy its 1,200 sales people in a national campaign to sell the drug. “This NDA marks a significant milestone for our company as we accelerated the global clinical development of lurasidone and achieved an earlier than anticipated submission to the FDA,” said Masayo Tada, president and chief executive officer, Dainippon Sumitomo Pharma.

Analysts expect the drug’s safety profile will allow it to break the billion-dollar barrier in the U.S. if it is approved. But it won’t be easy. The antipsychotic market in the U.S. is intensely competitive. Lurasidone is designed to work much like Zyprexa, Risperdal or Seroquel, without the weight gain that many patients experience. And the Japanese company is also testing the therapy as a treatment for bipolar disorder.

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Kids taking the latest generation of antipsychotic meds gain significant amounts of weight–as much as 19 pounds on average in just 11 weeks for kids taking Zyprexa, according to a study published today in JAMA. Abilify, Risperdal and Seroquel were all linked to weight gain as well. Here’s the WSJ story.

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In fact, every one of the more than 200 children and adolescents who took the medicines in the study added weight, Christoph Correll, a psychiatrist who was one of the authors of the study, told the Health Blog. For some drugs, doses didn’t matter; for others, they did.

The link to weight gain has been clear for a while. But it’s not entirely clear why people gain weight when they start taking these drugs, according to Correll. Answering that question could help explain how weight gain works in people who aren’t mentally ill. “Most likely these medications are using the same pathways associated with obesity,” Correll said.

In the meantime, docs should keep close tabs on the weight of kids who are taking these drugs. “The onset of the weight gain was so pronounced and so significant there’s probably an argument for doing those measurements every few weeks,” a child psychiatrist who wrote an editorial that accompanied the study told the WSJ.

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Market reaction to Johnson & Johnson’s earnings announcement reflects an overall worry about cost-cutting versus sales growth. Yes, J&J beat expectations, posting earnings of $1.20 per share, about 7 cents higher than analysts had estimated. But third-quarters sales came in at $15.1 billion, which fell short of those same estimates. At press time, the stock had fallen 2.62 percent, or $1.64, to $60.89. ”I think people would have been happier if the revenue was stronger and the beat on the bottom line was less,” Noble Financial Group analyst Jan Wald told Reuters.

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It wasn’t just analyst expectations that J&J’s sales failed to beat, either. That $15.1 billion represented a 5.3 percent decline from the third quarter of last year. And in further evidence of the relative weakness of U.S. drug markets versus the rest of the world, domestic sales dropped by 8.1 percent, while international sales would have grown 2.4 percent without the drag of currency effects.

Looking at J&J’s pharma division alone, the drop is even more marked. Worldwide drug sales amounted to $5.3 billion, down 14.1 percent year-over-year, including a negative 2.2 percentage-point currency hit. Domestic sales dropped a whopping 19.2 percent, as blockbuster drugs Topamax (down 88 percent in the U.S.) and Risperdal (down 71 percent) fell off the patent cliff.

Bright spots? Remicade, which grew by 5.7 percent in the U.S. and 5.9 percent worldwide, to $1.036 billion for the quarter. Risperdal Consta, the long-acting form of the now-generic antipsychotic, grew by 9.3 percent in the U.S. and 4.4 percent globally, to $353 million. And the company did get the FDA OK for its “new Remicade,” the anti-inflammatory Stelara. So there’s hope for next quarter.

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Johnson & Johnson reported Tuesday that second-quarter sales of prescription drugs dropped 13.3 percent to $5.5 billion compared to the prior-year period, due to generic competition and the negative impact of currency exchange. The result was better than analysts projected, and net income, which decreased 3.6 percent to $3.2 billion versus the same time last year, also exceeded consensus estimates.

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Analyst Jan Wald of Noble Financial Group remarked that “the pharmaceutical business looked especially strong to us,” noting that Johnson & Johnson’s revenue for Remicade rose to $1.1 billion, up 24.4 percent from the year-ago period. Sales for Risperdal Consta were up 1.5 percent to $348 million, while the company recorded a 13.6-percent rise in Concerta sales to $317 million.

Combined sales for Procrit/Eprex were down 11.5 percent to $577 million on continued safety concerns over these and other anaemia drugs, but the decline was less than initially feared, Wald remarked. Meanwhile, generic competition eroded sales of Risperdal and Topamax, which fell 66 percent and 73 percent, respectively, to $239 million and $182 million, compared with the corresponding period in 2008.

Overall revenue for the three months ending June 30 was down 7.4 percent to $15.2 billion, but came in $190 million higher than some analysts had speculated. Looking ahead, Johnson & Johnson reiterated its per-share earnings outlook of $4.45 to $4.55 for the year, excluding one-time items.

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Commenting on the news, Joel Levington of Hyperion Brookfield Asset Management, said Johnson & Johnson “did an excellent job of managing its costs to help offset declines in mature pharma products…The company’s balance sheet strength will provide it opportunities to continue making select acquisitions.”

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