Swiss Drug Maker Novartis Accused Of Unethical Kickbacks For Pharmacies And Doctors

The U.S. Department of Justice filed two lawsuits this week against the Swiss drug maker Novartis under the False Claims Act, which allows the U.S. to seek triple damages for fraud committed against the government.

The first accuses the company of paying kickbacks to approximately 20 pharmacies in exchange for switching transplant patients from rival medications to the company’s Myfortic immunosuppressant treatment.

In a press release, U.S. Attorney Preet Bharara estimated the cost to the public due to overpayment by Medicare and Medicaid to be in the tens of millions.

In one case, the release states, Novartis offered a pharmacist in Los Angeles a “bonus” rebate equivalent to 5 percent of the pharmacist’s annual sales of Myfortic, or several hundred thousand dollars, in order to “induce the pharmacist to ‘shoulder the burden’ of switching 700 to 1,000 transplant patients” to the drug.

In other cases, the cut given to pharmacists reached as high as 10 percent to 20 percent because, as one Novartis manager allegedly told prosecutors, “the ‘short term cost’ brought Novartis ‘a long term annuity.’”

The second complaint against Novartis centers around a multi-million dollar incentive program targeting doctors themselves, according to The Wall Street Journal.

As the news agency reports, drug companies commonly pay doctors to speak about new drugs while meeting with other doctors.

However, while the industry claims such meetings are primarily educational, U.S. authorities allege they often dissolve into simple kickbacks designed to get doctors to prescribe their drugs.

In the case of Novartis, prosecutors allege the company’s $68 million spent on roughly 38,000 such “meetings” used to promote the hypertension drugs Lotrel and Valturna and diabetes drug Starlix included fishing trips and meals at the restaurant Hooters.

The cases do not represent the first time the drug maker has come into conflict with the law: just three years ago Novartis was forced to pay $422.5 million in penalties after it pleaded guilty to a misdemeanor regarding the improper promotion of several of its medications.

Novartis President Andre Wyss has publically denied the charges, stating the company "invests significant time and resources to help ensure we conduct our business in an ethical and responsible manner."

In regards to the charges against rebates and discounts related to the the distribution of Myfortic, the company described such actions as "customary, appropriate and legal," as recognized by the government.

Furthermore, it described the accusations that the company's speaker programs "lacked any legitimate business purpose" as "without merit," once again stressing that such meetings are "customary."