Federal prosecutors in Washington, D.C. have nixed a tentative $1 billion settlement with Johnson & Johnson, holding out for a bigger settlement with the drugmaker for alleged improper marketing of its Risperdal schizophrenia drug, the Wall Street Journal said.

The report, citing sources familiar with the situation, said Department of Justice prosecutors in Washington rejected a proposed settlement worked out about two months ago between J&J and federal prosecutors in Philadelphia, and that the deal must now be renegotiated. Officials in the Justice Department's criminal division could not be reached immediately for comment.

The Department of Justice for years has been investigating the diversified healthcare company for alleged marketing of the anti-psychotic drug for unapproved uses, including for nursing home residents.

Individual states are also pressing similar allegations against J&J. The company in January said it will pay $158 million to settle a Texas lawsuit that accused it of improperly selling the drug to state residents on the Medicaid health program for the poor, including children.

That settlement fully resolved claims in Texas, J&J said, but does not affect other ongoing state or federal Risperdal litigation.

Settlement