Janssen Liability Increased to $1.6 Billion in Drug Fraud Suit

Janssen Products LP must pay over $1.6 billion in a False Claims Act suit for improperly billing the US government for HIV drugs, a New Jersey federal district court said.

The government is to receive $360 million in trebled damages and $1.28 billion in penalties, Judge Zahid N. Quraishi of the US District Court for the District of New Jersey said in a March 28 order. The penalties consist of $8,000 for each of the 159,574 false claims a jury found that Janssen caused to be submitted to the government, the final judgment said.

Whistleblowers Jessica Penelow and Christone Brancaccio “produced sufficient evidence” from which the jury could reasonably adduce that the Johnson & Johnson unit’s off-label drug marketing was a “substantial factor in causing physicians to submit claims for reimbursement to government payors, and that it was reasonably foreseeable that false claims would result from such conduct,” the court said in a separate March 28 opinion. The court, however, vacated the jury’s award for state FCA violations.

The court correctly identified the flaws in the state law claims, a Johnson & Johnson spokesperson said in an email.

“The court erred, however, in entering judgment with respect to plaintiffs’ analogous federal claims, which fail as a matter of law because, among other reasons, Johnson & Johnson ‘s [Janssen’s] promotion of its life-saving medications always was consistent with the FDA-approved labels, and plaintiffs failed to present any evidence that Johnson & Johnson ‘s [Janssen’s] promotion was false, material to or the cause of the government’s reimbursement decisions,” the spokesperson said.

“We are confident the remainder of the verdict will be reversed on appeal,” the spokesperson said.

William Ellerbe, counsel for the whistleblowers, said, “we are proud of the relators, Jessica Penelow and Christine Brancaccio, for their courage and determination in pursuing justice and compensation for the taxpayers for more than 12 years.”

“We are thankful to the jury and the jury system for delivering that justice, and we are grateful that the court’s reasoned decision took Janssen’s years of egregious conduct into account in assessing the appropriate penalty to help repair the harm that Janssen caused to the Medicare program and the taxpayers,” he also said.

Off-Label

The whistleblowers sued in 2012. Quraishi denied Janssen summary judgment in 2021.

Penelow and Brancaccio sufficiently argued that Janssen’s off-label promotion of Prezista and Intelence misled doctors about the drugs being appropriate for patients with lipid conditions, and therefore claims seeking reimbursement from the government were false, the court said in that opinion.

A jury in June determined that Janssen owed $120 million for violating the federal False Claims Act, and $30 million for violating state FCAs. Janssen then filed motions for a new trial and judgment as a matter of law, and the whistleblowers filed a motion for entry of judgment.

Quraishi, in addition to siding with the whistleblowers on the the issue of falsity, found here that the whistleblowers established FCA materiality.

The whistleblowers introduced evidence showing that Janssen engaged in off-label drug marketing, which violated an express condition of payment under federal health-care programs, the court said. A reasonable jury could have found that claims submitted to those programs were ineligible for reimbursement, the court said.

The court also rejected Janssen’s reliance on United States ex rel. Zafirov v. Fla. Med. Assocs. LLC to argue that the whistleblower provisions of the FCA are unconstitutional under Article II.

Quraishi said the court “declines to follow this singular non-precedential and out-of-circuit court decision, and instead follows every federal circuit court of appeals that has addressed this issue and holds that the FCA’s qui tam provisions are constitutional.”

Berger Montague and Reese Marketos LLP represent the whistleblowers. Kirkland & Ellis LLP and Troutman Pepper Locke LLP represent Janssen.

The case is United States ex rel. Penelow v. Janssen Prods. LP, D.N.J., No. 12-7758, 3/28/25.