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Novartis Ordered to Face US Lawsuit Over Doctor Kickbacks

  • Reuters

FILE - A building of Swiss pharmaceutical company Novartis is shown in Basel, Switzerland.

FILE - A building of Swiss pharmaceutical company Novartis is shown in Basel, Switzerland.

A federal judge said Novartis AG must face a U.S. government lawsuit accusing the Swiss drug maker of paying multimillion-dollar kickbacks, including a $9,750 dinner for three at a Japanese restaurant, to induce doctors to prescribe its drugs.

U.S. District Judge Paul Gardephe in Manhattan on Tuesday let the government pursue its entire lawsuit, brought under the federal False Claims Act. He also said New York can pursue most of its state law claims in a related lawsuit.

Julie Masow, a Novartis spokeswoman, said the Basel-based company is reviewing Gardephe's 90-page decision, and will continue to defend itself against the allegations.

The federal government's lawsuit is one of two it filed in April 2013 against Novartis, seeking triple damages over alleged kickbacks to doctors.

Authorities claim that Novartis caused Medicare and Medicaid to pay millions of dollars in reimbursements from 2002 to 2011 based on kickback-tainted claims for drugs such as Lotrel and Valturna to treat hypertension, and the diabetes drug Starlix.

They said these resulted from the East Hanover, New Jersey-based Novartis Pharmaceuticals Corp unit having lavished hefty speaking fees on doctors to appear at thousands of sham programs that were merely “social occasions,” where little work got done.

Authorities said Novartis also feted some doctors at high-end restaurants such as the Japanese restaurant Nobu in Dallas, Smith & Wollensky in Washington, D.C. and the three Michelin-starred L20 in Chicago, while others dined at the lower-end Hooters.

Novartis allegedly spent over $65 million and conducted more than 38,000 speaker programs for Lotrel, Valturna and Starlix alone over a decade. One doctor was allegedly paid to speak at his own office eight times.

“The pleadings explain in detail why the speaker events were shams and how they served as a vehicle for kickbacks,” Gardephe wrote. “Novartis has cited no case demonstrating that the government entities' pleading of particular false claims is deficient.”

Masow said Novartis is committed to “high standards of ethical business conduct,” and that speaker programs “can help educate other healthcare providers about the appropriate use of medicines so they can make informed prescribing decisions.”

In the other Novartis case, U.S. District Judge Colleen McMahon in August let the government pursue most claims over reimbursements for Myfortic and Exjade, respectively used by patients with kidney transplants and patients who get blood transfusions.

The Lotrel, Valturna and Starlix case was originally brought in January 2011 by former Novartis sales representative Oswald Bilotta. On Tuesday, Gardephe let Bilotta pursue part of his own lawsuit, which raises additional claims.

A spokeswoman for U.S. Attorney Preet Bharara in Manhattan declined to comment. A spokesman for New York Attorney General Eric Schneiderman was not immediately available for comment. Eric Young, Bilotta's lawyer, said his client is pleased his case will continue.

The federal government often joins False Claims Act lawsuits that it believes have greater merit. Whistleblowers share in damages that are recovered.

The case is U.S. ex rel. Bilotta v. Novartis Pharmaceuticals Corp, U.S. District Court, Southern District of New York, No. 11-00071.

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