TRENTON, N.J. (CN) – Johnson & Johnson’s senior management and board of directors grossly mismanaged the company and breached fiduciary duties for more than a decade in paying kickbacks to doctors to prescribe Johnson & Johnson drugs, biliary stents and orthopedic replacements, shareholders claim in a federal derivative complaint.
The Carpenters Pension Fund of West Virginia sued two CEOs, including current CEO William Weldon, former CFO Robert Darretta, and 19 past or current members of the board.
Officers and the board tried to cover up the schemes in proxy statements that failed to inform shareholders of the wrongdoing and its costs, the shareholders claim.
“The defendants’ focus on quickly maximizing profits came at the expense of patients’ health,” according to the complaint. “Additionally, defendants failed to consider the long term effects these schemes would have on J&J.”
The U.S. Department of Health and Human Services and the U.S. Department of Justice sued Johnson & Johnson for the kickbacks and other illegal promotional schemes involving its Topamax medication and hip and knee replacements made by its subsidiary DePuy Orthopaedics, according to the complaint.
Johnson & Johnson paid $165 million to settle these and other criminal and civil claims, the complaint states.
Plaintiffs seek costs, disgorgement, restitution, a declaration that “the election of directors to the board pursuant to the 2008 Proxy Statement and 2009 Proxy Statement [is] invalid,” reformation of company practices, and other relief,
The shareholders are represented by James Cecchi with Carella, Byrne, Cecchi, Olstein, Brody & Agnello of Roseland, N.J.