Novartis Close to Settling Kickback Violations, Filing Inadvertently Shows

Novartis building with logo on it

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Swiss pharma giant Novartis is closer to resolving six-year-old kickback charges with the U.S. government. The negotiations had been privately ongoing, but a recent letter that was accidentally published reveals the case may soon be concluded.

In 2013, Novartis was the subject of a healthcare fraud lawsuit filed by former U.S. Attorney Preet Bahara that alleged the company held approximately 80,000 “sham” events where doctors were “wined and dined” by Novartis in order to boost prescriptions of the company’s cardiovascular drugs. The government alleged that as a result of Novartis’s “kickback scheme, Medicare and Medicaid have issued tens of millions of dollars in reimbursements based on false, kickback-tainted claims.”

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The long-running case against the pharma company was scheduled to go to court last month, however, the trial was indefinitely postponed. Now, the accidental publication of a letter filed as part of a court document shows the pharmaceutical company and the U.S. government have made "significant progress" on reaching a deal, Bloomberg reported late Tuesday. The government had been seeking documents to support allegations Novartis “defrauded federal health-care programs of hundreds of millions of dollars over a decade.” In November 2015, Novartis agreed to pay $390 million to settle a civil lawsuit related to the kickback payments to specialty pharmacy companies that distributed the drugs Exjade and Myfortic. Although Novartis paid the amount, they neither admitted nor denied liability.

Citing the recent letter, Bloomberg said there is a "'monetary aspect’ of the settlement that has been submitted to the Justice Department for expedited approval.” What that financial aspect may be is not known, but it is likely going to be considerably higher than the 2015 financial settlement, according to reported speculation. Additionally, the letter showed that Novartis is negotiating a new corporate integrity agreement with the U.S. Department of Health and Human Services that would require improved compliance with the law, Bloomberg said. In exchange for the settlement figures and improved compliance, Novartis’ medications would continue to be covered by federally-supported health programs like Medicare. The settlement could be “substantially completed” by June 18 and finalized two months later.

Eric Althoff, a spokesman for Novartis, confirmed the settlement discussions with Bloomberg. However, Althoff could not provide additional details as to what the agreement may include.

Novartis had already been moving toward increased compliance and ethics following a more recent scandal involving an attorney close to President Donald Trump. Last year, Novartis was embroiled in a scandal related to a $1.2 million payment to Essential Consultants, owned by Michael Cohen, an attorney who was close to President Donald Trump who has since been sentenced to prison for tax fraud and perjury. As a result, the company hired a new chief ethics officer to oversee the company’s “approach to ethics, risk and compliance in the coming years." Siemens veteran Klaus Moosmayer was taped for the role of Chief Ethics, Risk and Compliance Officer. Moosmayer succeeds Shannon Thyme Klinger who was recently appointed to the role of group general counsel after Felix R. Ehrat resigned following revelations about the Cohen deal.

These aren’t the only scandals with which Novartis has been involved. In 2017, the company faced allegations it bribed physicians and other public officials to boost prescriptions and company sales in Greece. In August 2016, Novartis executives in South Korea were indicted for allegedly making $2 million in payments to physicians in exchange for prescribing Novartis medications. Similar allegations were made in 2016 by a whistleblower in Turkey.

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