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Novartis to Pay $642 million for Kickbacks, Medicare Schemes

Novartis to Pay $642 million for Kickbacks, Medicare Schemes

Posted on Friday, August 7th, 2020

Novartis Pharmaceuticals Corporation has agreed to pay more than $642 million to settle two separate claims brought by the U.S. Department of Justice that the company violated the False Claims Act. According to the lawsuits filed against the pharmacy giant, Novartis hid behind charitable foundations to illegally funnel co-payments for Medicare patients taking two of its drugs, Gilenya and Afinitor. It was also allegedly paying illegal kickbacks to physicians who prescribed several additional medications it produced.

In both cases, Novartis allegedly illegally influenced doctors to prescribe their medications and undermined Medicare cost-control efforts mandated by Congress.

The Anti-Kickback Statute, which is at the heart of the claims, prohibits any company or person from offering or paying, directly or indirectly, money or gifts to entice the use of any product or services covered by Medicare, Medicaid, or any other program funded with federal tax dollars. This includes improper payment of patient co-pay dollars, as well as improper payment to providers.

Illegal Tactics to Obtain Medicare Payments

Novartis will be paying $51.25 million to resolve allegations that it illegally paid co-pays for Medicare patients taking its drugs. Though their role may initially seem benevolent, Congress has issued co-pay requirements in part to create a check on the prices that manufacturers like Novartis can demand for their drugs. 

According to the lawsuit, in late 2012, Novartis learned that over 300 patients who were receiving free Galenya, a drug used to treat multiple sclerosis, were about to become Medicare-eligible. Novartis used a foundation to transition those patients to Medicare Part D. They then paid the foundation “donations” to cover the relatively small co-pays while collecting larger payments for the drugs from Medicare.

The Justice Department alleges that Novartis did something similar with Afinitor, a drug used to treat advanced renal cell carcinoma and certain pancreatic tumors. The filing alleges that, once Novartis realized it was the only donor to the foundation’s co-pay program, it used its position to influence the foundation to modify requirements that determined drugs it would help to cover. Those modifications favored Afinitor, resulting in more sales for Novartis.

Further, in 2012, Novartis allegedly influenced another foundation to assist with Afinitor co-pays, donating the cost paid for by the foundation in order to make a much larger profit from Medicare.

Doctor Kickbacks Schemes

For the second set of allegations, Novartis will pay $591,442,008 and will forfeit $38.4 million in assets to resolve alleged violations of the False Claims Act that it paid doctors to prescribe Lotrel, Valturna, Starlix, Tekturna, Tekturna HCT, Tekamlo, Diovan, Diovan HCT, Exforge, and Exforge HCT. Such kickbacks are illegal because they encourage doctors to prescribe medications for their personal benefit, rather than prescribing treatments based on the needs of the patient.

Novartis allegedly hosted tens of thousands of “speaker programs” in which it paid physicians to speak on the benefits of Novartis. However, the majority of these events were nothing more than expensive social events in which high-dollar dinners and top-shelf alcohol were served freely. Often, the drugs were not discussed by “speakers,” though they received payment. The payments were essentially bribes for the doctors to prescribe drugs manufactured by Novartis.

In addition to being illegal, these allegations outline the unethical means drug manufacturers go to in order to profit. These types of fraudulent acts contribute to over-prescription of medications to the American public, as well as to the increasingly high cost of prescription drugs.

OnderLaw is currently representing clients who have been harmed or have died from complications of Novartis-produced Tasigna, used to treat a specific type of leukemia. Though Tasigna has been the subject of numerous peer-reviewed studies that have concluded it causes life-threatening and permanent damage, including need for limb amputation and hardening of arteries, the company did not warn physicians or patients of these dangers.

The Justice Department filed a lawsuit against Novartis and settled in 2015 for $390 million after the company engaged in illegal misbranding and payment of kickbacks for Tasigna. Novartis engaged in an aggressive marketing campaign aimed at promoting Tasigna over competing leukemia treatments, touting false claims of the drug’s superiority and omitting warning information. 

Tasigna is among the 10 most popular cancer drugs in the world, yielding more than $1.7 billion in sales in 2016.


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