U.S. Alleges Novartis AG Hosted 80,000 ‘Sham’ Events to Wine and Dine Doctors to Prescribe Drugs, Seeks Records

March 28, 2016
By Alex Keown, BioSpace.com Breaking News Staff

NEW YORK – Swiss drugmaker Novartis AG is under pressure from the U.S. Attorney’s office in Manhattan to provide information about 80,000 “sham” events in which the government maintains the drug company “wined and dined” doctors to prescribe the company’s cardiovascular drugs, Bloomberg reported Saturday.

Last year Novartis settled a civil lawsuit related to allegations of kickbacks. In 2013, the U.S. Attorney for Manhattan filed the healthcare fraud lawsuit against Novartis alleging 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.”

The latest move by U.S. Attorney Preet Bahara of New York’s Southern District, was filed March 25. The government is seeking information about events the company may have put on to encourage physicians to prescribe the medications. The government is seeking documents to support allegations Novartis “defrauded federal health-care programs of hundreds of millions of dollars over a decade,” Bloomberg reported. The government is building upon a previous case against Novartis for kickback payments made to doctors to prescribe certain company medications.

“The requested documents go to the core issues in this case: whether educational materials were provided at these events; which doctors actually attended the events; how much money was spent on meals and honoraria; and indeed, most fundamentally, whether the underlying documentation shows that a particular event actually took place,” Bloomberg reported, citing the government’s filing.

On March 22, Novartis sought a hearing from a judge over the alleged 80,000 events, saying the government “exploded” the size of the case, Bloomberg reported.

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. The settlement, which is between Novartis Pharmaceutical Corporation , a U.S. subsidiary of Novartis AG, will be paid to both the U.S. government and to state Medicaid programs. The governments of more than 40 U.S. states raised concerns over payments Novartis made to the specialty pharmacy companies it contracts with to entice them to recommend prescriptions to Medicaid and Medicare patients.

According to FBI Assistant Director-in-Charge Diego Rodriguez, Novartis was providing incentives to push their medications on patients through the specialty pharmacy companies. According to the government, Novartis created a “closed distribution network” involving three specialty pharmacies, BioScrip , Accredo, and US Bioservices in order to give Novartis control over how many Exjade patients would be assigned to each pharmacy. The government said in early 2007, Novartis saw sales of Exjade, which lowers iron levels, fall, primarily due to side effects of the drug, which prompted Novartis to hire pressure the specialty pharmacy companies to “hire or assign nurses to call Exjade patients and, under the guise of education or clinical counseling, encourage patients to order more refills.” The government contended the company downplayed the side effects related to Exjade.

Earlier this month, Novartis also agreed to pay $25 million to settle charges it violated China’s Foreign Corrupt Practices Act, Statnews reported Sunday. The company was fined for allegedly bribing health care providers in that country to distribute its drugs. According to the U.S. Securities and Exchange Commission, Novartis subsidiaries in China engaged in various schemes from 2009 to 2013. One such allegations involved Novartis’s Sandoz subsidiary to bring Chinese health care workers to the United States for a 2009 health care conference in Chicago. Instead of attending the conference, the company arranged visits to various points of interest to places like Niagara Falls and also provided hundreds of dollars in cash to each Chinese officials as “walking around money,” the SEC said.