Pharmacy Kickbacks Lawsuit Spurs Novartis Settlement

Novartis is paying $390 million to settle charges that it paid kickbacks to pharmacies to encourage drug sales.

The US government maintains that a US unit of Novartis violated the False Claims Act and the Anti-Kickback Statute with its incentives to sell the iron chelator Exjade and the immunosuppressant Myfortic.

Novartis allegedly gave patient referrals, discounts, and rebates to Accredo Health Group, Bioscrip Inc, and US Bioservices Corporation to encourage these specialty pharmacies to recommend that patients order Exjade refills. This action then led to false claims submitted to Medicare and Medicaid, the government contended.

Novartis was asked to acknowledge the claim that after seeing poor sales of Exjade, it told pharmacies that it would terminate the relationship if they did not improve their performance. In response, the pharmacies allegedly set up programs in which personnel called patients to encourage them to order prescribed refills.

The lawsuit also alleged that Novartis paid kickbacks in the form of rebates to the pharmacies so that they would encourage refills of the oral iron chelator.

Bioscrip and Accredo have agreed to settle with the government.

The government also alleged that Novartis gave discounts and rebates to specialty pharmacies such as Transcript Pharmacy, Bryant’s Pharmacy and Healthcare Center, and Kilgore’s Medical Pharmacy in an agreement where the pharmacies recommended to physicians that they prescribe Myfortic instead of a competitor drug such as CellCept or generics.

Novartis’ own ethics policy mentioned that the Anti-Kickback Statute “makes it a criminal offense to, among other things, knowingly and willfully offer ... any ‘remuneration’ in exchange for, or to induce the ...recommendation of, any item or service for which payment may be made under Medicare [or] Medicaid.”

The government asserted that Novartis deserved to pay up to $1.52 billion in damages and $1.83 billion in fines.

The company’s settlement follows Valeant’s move to cut ties with the specialty mail-order pharmacy Philidor Rx Services LLC, which shuttered amid reports of improper behavior.