Agreement Reached After Novo Nordisk A/S is Accused of Disguising Salespeople and Dealing Kickbacks

Published: May 02, 2017

Agreement Reached After Novo Nordisk A/S Is Accused of Disguising Salespeople and Dealing Kickbacks May 1, 2017
By Alex Keown, BioSpace.com Breaking News Staff

NEW YORK – Danish drugmaker Novo Nordisk has settled a U.S. Department of Justice probe into is the company’s marketing activities for its diabetes drugs that allegedly included paybacks to doctors and disguising sales people as medical educators, Bloomberg reported.

Called a “white coat marketing scheme,” the company allegedly used these tactics to push prescriptions of three diabetes drugs, NovoLog, Levimir and Victoza, which combined for $6 billion in sales for 2013, Business Insider reported, citing the federal complaint that specified that year. For 2013, the three drugs combined for about 10 percent of Novo Nordisk’s worldwide sales that year. Victoza, a GLP-1 receptor, is Novo Nordisk’s biggest selling drug. It is expected to generate about $2.5 billion in revenue for the company this year.

A Novo Nordisk spokesperson confirmed the settlement with Bloomberg, but added that the process has not yet been finalized and could not provide additional comments regarding the allegations.

According to whistleblower allegations, the company sent salespeople disguised as diabetes educators into doctor’s offices to promote the company’s diabetes drugs, in violation of federal law due to those drugs being covered by federal health insurance programs. Because the sales reps were identified as Certified Diabetes Educators (CDE), they were given unprecedented access to doctors, the lawsuit said. The CDEs provided free education to the doctors, the lawsuit said. Business Insider noted in its report that this practice also violated Novo Nordisk’s membership agreement with PhRMA, the lobbying agency that “prohibits member companies from exchanging free medical education for prescriptions.” The CDEs reportedly provided the free information as part of an enticement to get doctors to prescribe the Novo Nordisk drugs, according to the lawsuit, which violates federal anti-kickback statutes.

According to the lawsuit, the company began its “white coat marketing scheme” in 2006. The lawsuit alleges that Novo Nordisk sought to bypass rules established by the U.S. Food and Drug Administration regarding promotional materials and communications from sales professionals. The lawsuit said that the value of having a CDE calling on a doctor “cannot be understated” because they provide materials and education that could cost doctors thousands of dollars. The lawsuit was brought by a former Novo Nordisk sales manager and a contracted nurse.

“In reality the CDEs were nothing more than sales representatives disguised as clinicians… to gain access to prescribing physicians,” the lawsuit said.

This isn’t the first time Novo Nordisk has been penalized in the United States for kickback schemes. In 2009, the company paid an $18 million fine in connection with $1.4 million in illegal kickbacks paid to the former Iraqi government following the Department of Justice’s investigation into the U.N. Oil-for-Food program. According to a Justice Department statement “between 2001 and 2003, Novo paid approximately $1.4 million to the former Iraqi government by inflating the price of contracts by 10 percent before submitting the contracts to the United Nations for approval and concealed from the United Nations the fact that the price contained a kickback to the former Iraqi government. Novo also admitted it inaccurately recorded the kickback payments as "commissions" in its books and records.”

Shares of Novo Nordisk are down slightly this morning, trading at $38.46.

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