With just one week before the start of a False Claims Act trial involving drug manufacturer Novartis Pharmaceuticals, the company decided to avoid the unpredictability of a jury in favor of a calculated $390 million settlement. The company is facing several False Claims Act lawsuits involving a number of different drugs.
From complaints filed by the same whistleblower, Novartis faces liability over four additional drugs, as well as an additional whistleblower case filed by former sales representatives concerning unlawful kickbacks. The first case is docketed to begin trial in February 2016 while the second is still in the discovery phase. While the company is juggling several legal troubles, in today’s case, we’ll focus on the recently settled false claims allegations which concern the popular drugs Myfortic and Exjade.[1.“Novartis to Pay $390 Million to Settle False Claims Whistleblower Case,” Corporate Crime Reporter, October 27, 2015, http://www.corporatecrimereporter.com/news/200/novartis-to-pay-390-million-to-settle-false-claims-case/.]
Details of allegations involving Exjade, Myfortic
In late 2013, Novartis was facing significant liability with regard to its transplant drug Myfortic and the iron chelation drug Exjade. More specifically, the relator’s 2013 lawsuit alleged that Novartis offered incentives to pharmacy services companies – including BioScripts, Express Scripts, and Accredo Health Group – to encourage and boost the sales of these drugs.
Novartis is alleged to have encouraged pharmacies to recommend Myfortic as opposed to its cheaper, generic alternative. As a result, unsuspecting transplant patients were prescribed the expensive medication despite less costly alternatives being available, all at the expense of taxpayer-funded Medicare and Medicaid.
Likewise, Novartis provided patient referrals and rebates to pharmacies in exchange for their willingness to prescribe Exjade, despite the fact less costly options were available. The government’s complaint further alleged that pharmacies were emphasizing the benefits of Exjade without adequately explaining the risks, some of which could be deadly.
Novartis settles claims
Had the case involving Exjade and Myfortic gone to trial, Novartis was looking at a potential for $3 billion in fines and penalties. Opting to hedge its bets, the company settled just days before jury selection was set to begin – agreeing to pay $390 million back to the government. According to Taxpayers Against Fraud, a nonprofit group devoted to advocating on behalf of whistleblowers, the final sum total of the fines, penalties, and settlement monies Novartis is expected to pay will likely set records – especially considering it still has to deal with allegations about four more drugs under the alleged kickback schemes.
In a statement by the U.S. Attorney’s Office, “[T]he Department will lose credibility if it does not hold individuals accountable in a case of this size where the company is a recidivist already operating under a corporate integrity agreement. At the very least, the Department should name and recommend to the Office of the Inspector General at HHS that culpable key and mid-level executives be considered for personal exclusion.”