Drugmaker Novartis Must Face Doctor Kickback Suit: U.S. Judge

by Ike Obudulu Posted on April 2nd, 2019

Swiss pharmaceuticals giant Novartis AG (NVS) must face a US government lawsuit accusing it of paying millions of dollars in kickbacks to doctors in exchange for its drugs being prescribed, according to a ruling released Monday.

A federal judge in Manhattan denied a motion for summary judgment by Novartis, holding that the US government provided enough evidence of a “company-wide kickback scheme,” and that the government need not provide evidence of provide proof of a “quid pro quo between physicians and Novartis,” in order for the company to stand trial.

Novartis AG spokesman Eric Althoff said “We are disappointed in today’s decision and look forward to presenting our case at trial.” Althoff went on to state, “We continue to believe that the government has insufficient evidence to support its claims.”

The lawsuit stems from a 2011 whistleblower lawsuit, in which the US intervened in 2013, alleging violations of the False Claims Act. The allegations include kickbacks to doctors for prescribing hypertension drugs Lotrel and Valturna, and the diabetes drug Starlix. The alleged kickbacks involved speaking fees for doctors at “sham” lunch-n-learn events, as well as treating doctors to lavish meals, with one purportedly exceeding $9,000.

Novartis has settled similar cases involving alleged illegal methods of promoting its medicines. In 2010 it agreed to pay $422.5 million to settle various civil and criminal allegations while pleading guilty to mishandling one drug, while refusing to admit any other wrongdoings. Then in October 2015, Novartis settled a case for $390 million on claims it paid rebates to specialty pharmacies to promote two of its drugs.

U.S. District Judge Paul Gardephe in Manhattan also rejected the Swiss drugmaker’s bid to keep key government evidence out of the case, and ruled that the government does not have to prove a direct “quid pro quo” agreement between Novartis and doctors for the company to be liable.

The ruling means that, unless Novartis settles, the case is headed for trial.

The case began in 2011 as a whistleblower lawsuit filed by Oswald Bilotta, a former Novartis sales representative. Such lawsuits, brought under the federal False Claims Act, allow individuals to sue on behalf of the government, which may choose to intervene.

The U.S. government and the state of New York both intervened in the case in 2013, accusing Novartis of paying doctors kickbacks so they would prescribe several of its drugs, including hypertension drugs Lotrel and Valturna and diabetes drug Starlix.

Those kickbacks included speaking fees for doctors at “sham” educational events, the lawsuit said, with one doctor being paid to speak at his own office eight times. The company also treated doctors to lavish meals, including a $9,750 dinner for three at a Japanese restaurant, according to the lawsuit.

Government health insurance programs Medicare and Medicaid were billed millions of dollars from 2002 to 2011 for drugs prescribed by doctors who took kickbacks, the lawsuit said, violating the False Claims Act. The government is seeking damages of three times what it was billed for allegedly fraudulent claims.

Novartis has previously settled U.S. allegations that it used illegal methods to promote its medicines.

In 2010, it agreed to pay $422 million to settle various civil and criminal allegations, including claims of paying kickbacks to doctors. Novartis pleaded guilty to mislabeling one drug as part of that settlement, but otherwise did not admit wrongdoing.

In October 2015, Novartis agreed to pay $390 million to settle claims that it paid rebates to specialty pharmacies to push two of its drugs, without admitting wrongdoing.

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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