Risk & Compliance

Novartis Settles Kickback Charges for $370M

The Swiss drug maker allegedly turned specialty pharmacies into a "biased sales force" for its medications.
Matthew HellerNovember 20, 2015

A judge on Friday approved a $370 million settlement against Novartis over fraud charges that the Swiss drug maker paid kickbacks to specialty pharmacies in return for recommending two of its medications.

The case originated with whistleblower allegations from a former Novartis sales manager involving Exjade, an iron-reduction treatment for patients who undergo blood transfusions, and Myfortic, a drug used in kidney transplant patients. Novartis announced the preliminary settlement in October.

“Novartis turned pharmacies that should have been disinterested healthcare providers into a biased sales force for the drug maker,” Preet Bharara, the U.S. Attorney for Manhattan, said Friday in a news release. “Drug makers and their relationships with healthcare providers … must comply with the Anti-Kickback Statute. If they don’t, we will bring all appropriate law enforcement tools to bear to ensure that they do.”

The U.S. had sought as much as $3.3 billion from Novartis, alleging it paid kickbacks in the form of rebates to get specialty pharmacies to recommend Exjade and Myfortic to patients and to increase sales.

“Novartis knew that, when the pharmacies called patients, they emphasized the benefits of taking Exjade … while understating the serious, potentially life-threatening risks of taking Exjade,” the Department of Justice said.

The company also allegedly incentivized the pharmacies to intensify their promotional efforts on behalf of Exjade by allocating more patient referrals and giving higher rebates to pharmacies that obtained higher refill rates.

As far as Myfortic, the government said Novartis offered lucrative rebate offers to five specialty pharmacies in return for their promise to recommend to doctors that they switch patients to Myfortic from competitor drugs.

“Novartis’s kickbacks and other aggressive sales tactics … threatened the impartiality of medical decision-making and the financial integrity of Medicare and Medicaid,” said Scott Lampert of the Department of Health and Human Services.