Pharma Giant Novartis Settles FCA Claims

Pharma giant Novartis has agreed to pay more than $642 million to resolve claims it violated the False Claims Act (FCA). The company also will forfeit $38.4 million under the Civil Asset Forfeiture Statute.

In the first settlement, the company agreed to pay $51.25 million to settle allegations it illegally paid the copay obligations for Medicare patients taking its drugs Gilenya and Afinitor. Gilenya, is approved for treatment of relapsing forms of multiple sclerosis and Afinitor is approved for treatment of advanced renal cell carcinoma and progressive neuroendocrine tumors of pancreatic origin.

Novartis is alleged to have used three charitable foundations to funnel money to Medicare patients taking those drugs. The money was used for copayments.

“Novartis coordinated with three co-pay foundations to funnel money through the foundations to patients taking Novartis’ own drugs,†said U.S. Attorney Andrew E. Lelling for the District of Massachusetts. “As a result, the Novartis’ conduct was not ‘charitable,’ but rather functioned as a kickback scheme that undermined the structure of the Medicare program and illegally subsidized the high costs of Novartis’s drugs at the expense of American taxpayers.  At the same time, we recognize that Novartis’ current management has taken constructive steps to address the government’s concerns with the company’s prior relationships with co-pay foundations.â€

As we wrote about last December, such conduct has caught the attention of U.S. lawmakers as well as the U.S. Department of Health and Human Services.

In the second matter, Novartis agreed to pay more than $591 million to resolve FCA claims that it paid kickbacks to doctors to induce them to prescribe a number of its drugs. In addition, Novartis will forfeit $38.4 million under the Civil Asset Forfeiture Statute.

In this matter, it was alleged that Novartis hosted tens of thousands of speaker programs and related events under the guise of providing educational content, when in fact the events served as a way to pay doctors bribes in exchange for prescribing their drugs. Doctors were paid to speak at these events. However, they were little more than social events at expensive restaurants, or in some instances the event never took place and the speaker was simply paid a fee.

“For more than a decade, Novartis spent hundreds of millions of dollars on so-called speaker programs, including speaking fees, exorbitant meals, and top-shelf alcohol that were nothing more than bribes to get doctors across the country to prescribe Novartis’s drugs,†said Acting U.S. Attorney Audrey Strauss for the Southern District of New York. “Giving these cash payments and other lavish goodies interferes with the duty of doctors to choose the best treatment for their patients and increase drug costs for everyone.â€

Novartis also will pay an additional $48,151,273 to resolve state Medicaid claims.

The settlement resolves a lawsuit initially filed under the whistleblower provision of the FCA. The whistleblower in this case was Oswald Bilotta, a former Novartis sales representative. He filed his case in 2011.  In 2013, the United States and the State of New York intervened in the lawsuit.

In addition to the financial obligations, Novartis entered into a corporate integrity agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General. Among other things, the five-year agreement requires Novartis to significantly reduce the number of paid speaker programs and the amounts spent on such programs. Those programs may only occur under limited circumstances and in a virtual format. In addition, the CIA requires Novartis to implement measures designed to promote independence from any patient assistance programs to which it contributes. The CIA also requires multifaceted monitoring of Novartis’s operations and obligates company executives and board members to certify about compliance.

As we have previously written about, failure to abide by such agreements can trigger additional problems for a healthcare organization or provider.

The Health Law Offices of Anthony C. Vitale helps clients develop effective compliance programs that assist with the identification and correction of any problems before you become the target of an investigation. Should you or your company become the target of an investigation, an effective compliance program may help you to mitigate or eliminate potential sanctions, penalties, and program exclusions. Give us a call at (305) 358-4500 or email info@vitalehealthlaw.com