Home > Blog > Federal Government Suing Drug Company Novartis for Alleged Kickbacks

In the span of one week, the federal government has filed two civil suits against Swiss pharmaceutical company Novartis, alleging that the drugmaker paid kickbacks to both doctors and pharmacies to increase sales of their drugs.  Allegations include paying steep speaking fees and indulging doctors in extravagant meals at lavish restaurants in an effort to persuade doctors to prescribe.  In one instance, Novartis spent $10,000 for a dinner for three at Nobu, a Manhattan restaurant.  Other misbehavior included fishing trips and meals at Hooters Restaurant.

Because of prescriptions written based on kickbacks, the federal government alleges that Medicare and Medicaid have paid millions of dollars in reimbursements.

Novartis is alleged also to have engaged in unethical behaviors with pharmacies, using rebates and discounts as disguised kickbacks to convince pharmacists to use their sway with doctors on their kidney transplant drug, Myfortic.  The drug competes with Roche’s drug CellCept.  According to the New York Times:

The lawsuit, filed in Federal District Court in Manhattan, contended that Novartis promised rebates and discounts to 20 or more pharmacies if they would persuade doctors to switch patients to Myfortic from CellCept, or to keep patients on Myfortic after the cheaper generic versions of CellCept reached the market.

The suit also alleges that Novartis strategically picked important pharmacies, and coached the pharmacists to give this advice to doctors as if it were their own, and to make no mention of Novartis or what they were receiving in return for dispensing this particular advice.

A particular example of this behavior: Novartis paid $650,000 in kickbacks to a pharmacy in Batesville, AK, which then submitted 8,300 Myfortic claims to Medicare Part B, which totaled more than $3.2 million in reimbursements.

Novartis’s strategy worked: this pharmacy alone went from $100,000 in Myfortic sales to over a million in one year.

This would not be the first time that Novartis was disciplined for its misbehaviors.  Less than three years ago, the drug company settled allegations of kickbacks for $422.5 million, and also entered into a corporate integrity agreement.  This agreement required compliance programs related to promotional activities, and a breach of this agreement could mean that Novartis is banned from participating in federal health care programs such as Medicare and Medicaid.  This action, called exclusion, would be a huge penalty, much more serious than a fine could ever be.  The federal government hasn’t said whether or not they will pursue this punishment.

This is not the first time a pharmaceutical company has been caught in unethical behaviors.  Nor is it the first time that a drug company has been a repeat offender.  Drug companies are building these government fines into their business models, and as long as the profits they make from their misbehavior exceed the fines, they have no real incentive to change.

It is the patient that is the real loser in this situation.  Yes, the federal government suffers when drug companies use the system and end up getting reimbursed by Medicare and Medicaid.  But it is the patients who are receiving medical advice and treatment that is anything but objective.  They are being prescribed a particular medicine not because it is the best option, but because they got a free dinner at a fancy restaurant or a massive “speaking fee” for a presentation.  This is not how medicine in the U.S. should work.

Have you been injured by a drug or device?  The attorneys at Kirkendall Dwyer LLP believe that the drug companies should be held responsible for the drugs that they make.  Visit our drug and device section for more information on the specific drugs we are working on now, and as always, we are here to help you 7 days a week.  Contact us for your free case review.