Novartis, the Swiss based multinational pharmaceutical company, has entered into a settlement agreement that requires the company to pay $390 million resulting from a False Claims Act lawsuit filed by a former sales manager. The former employee blew the whistle on Novartis, one of the world’s largest pharmaceutical companies in terms of gross sales, for using kickbacks to bribe specialty pharmacies into inducing patients to refill Novartis drugs. The settlement between the U.S. division of Novartis and the federal government as well as forty states was based on the practice of issuing kickbacks to dispense costly Novartis medications. According to Reuters, the pattern of kickbacks extended from 2007 to 2012.
The False Claims Act lawsuit alleged that six different drugs were involved in the kickback scheme. Specialty pharmacies were incentivized to push Novartis drugs to increase the number of refills of the medications. More patients were allocated to those specialty pharmacies that were successful in pushing patients to refill the applicable expensive Novartis drugs, such as Exjade (an iron chelation drug) and Myfortic (a transplant drug). The lawsuit also alleged that Novartis encouraged specialty pharmacies to minimize the potential side effects and risks associated with their medications. Pharmacies were motivated to achieve shipping targets for the medications on a quarterly basis. Allegations in the qui tam action also indicated that Novartis relied on what were referred to as “score cards” that indicated which pharmacies kept patients on the companies drugs for the longest period.
Bioscrip, one of the specialty pharmacies involved in the scheme, provided government prosecutors with information regarding their improper financial relationship with Novartis. Representatives of Bioscrip reportedly admitted pushing patients to refill Exjade at the urging of Novartis. Although Bioscrip also was ordered to pay $15 million, the company presumably received more lenient penalties in exchange for its cooperation with the DOJ. Evidence also was provided by Accredo Health Group, Inc. which acknowledged setting up kickback that amounted to approximately $60 million according to settlement documents.
Despite the significant financial penalties leveled against Novartis, they brazenly continue to engage in the underlying conduct that motivated the qui tam action. A Wall Street Journal report indicates that Joseph Jimenez, the Novartis CEO, defended the rebates to specialty pharmacies as a system intended to encourage patients to complete their course of treatment. The pharmaceutical executive also claimed that the conduct is a common industry practice because pharmacies need to play a role in promoting patient adherence.
The recalcitrant stance taken by the drug company is easy to understand based on financial data. The company’s 2014 annual report indicated that the drug manufacturer reported $58 billion in net sales and nearly $11 billion in free cash flow. The massive profits generated by the drug company’s elicit practices explain its willingness treat massive fines as a cost of doing business while persisting in fraudulent schemes that endanger the public.
The whistleblower who filed this lawsuit will receive a significant award for filing this action under the False Claims Act. Whistleblowers who reveal these types of pharmaceutical industry practices serve a vital function by promoting public safety and exposing fraud. At Barrett Law, our Mississippi Qui Tam Lawyers work to protect individuals who expose corrupt and unlawful practices while seeking the fullest compensation for whistleblowers. Contact our firm today at (601)790-1505 to schedule your free consultation, so we can answer any questions you may have regarding filing car accident case.
