Novartis Pharmaceuticals to Face Possible False Claims Act Liability for Kickbacks

Swiss-based Novartis Pharmaceuticals has been subjected to possible liability under the False Claims Act – and a federal judge in New York recently concluded the case may continue. In U.S. ex rel. Bilotti v. Novartis Pharmaceuticals Corp., a whistleblower brought to light several issues involving the drug maker, most notably its business model involving exorbitant and blatant kickbacks offered to doctors in exchange for the promise to use its products. Despite years of procedural wrangling by the defendant – particularly since it is facing two separate lawsuits for misconduct pertaining to various pharmaceutical drugs – U.S. District Judge Paul Gardephe in Manhattan issued a 90-page ruling allowing the case, and the subsequent intervention by the Department of Justice, to continue. The government is seeking reimbursement for money expended due to false claims, as well as treble damages.

Details of Lawsuits Against Novartis

Novartis is a multi-national pharmaceutical corporation based in Switzerland with offices around the world. One of its former employees commenced two separate lawsuits against the company in 2011 – one pertaining to the drugs Myfortic and Exjade, the other involving Lotrel, Valturna, and Starlix. The former was presented before U.S. District Judge Colleen McMahon, who in August of this year ruled that the case could continue and the U.S. Department of Justice could carry on its investigation of Novartis. The latter filing was given the green light in September of this year, allowing federal authorities the opportunity to settle or litigate the kickback claims against the company – which is already under a compliance agreement for prior False Claims Act misconduct.

According to the whistleblower’s assertions, Novartis sets aside a remarkable amount of money for its “educational programs” aimed at doctors and healthcare providers. According to Novartis, doctors are given the opportunity to attend “speaker programs” designed to “help educate other healthcare providers about the appropriate use of medicines so they can make informed prescribing decisions.” However, the Department of Justice labeled the programs as a “sham,” citing numerous occasions where doctors and healthcare professionals were paid to attend social functions where no work was actually taking place.

In one example, the DOJ points to a $9,000 Japanese dinner for three – paid for by Novartis, presumably to induce doctors to prescribe its medication. Reportedly, the company spent $65 million over ten years and conducted over 38,000 “speaker programs” for its drugs. The DOJ also exposed alleged duplicitous paid speaking engagements wherein the same doctor spoke on the same topic over and over, retaining over $3,000 per engagement – with the same four or five doctors in attendance. The complaint concludes with a list of speaker programs held at high-end restaurants or social gatherings, including a fishing expedition, nightclubs, and Hooters.

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