August 10, 2016
By Alex Keown, BioSpace.com Breaking News Staff
SEOUL, Korea – Novartis is once again at the center of kickback allegations, this time in Korea.
StatNews is reporting that six former and current Novartis executives, including the former chief executive of the Korea division, Haksun Moon, have been indicted on charges of providing more than $2 million in payments to physicians in exchange for them prescribing Novartis medications. According to reports, the monies were paid out to physicians over a five-year period, from 2011 until earlier this year. Moon has been suspended since April, StatNews said.
Not only were Novartis executives indicted, but so were six publishers of medical journals and 15 physicians charged, StatNews said.
According to reports, Novartis used money to host sham events that were allegedly hosted by the medical publications. Novartis’ Korea division, the prosecution said, used the publications to provide funding for physicians to provide articles to the publications and also gave them funds disguised as attendance fees, the Korea Herald said.
A Novartis spokesperson acknowledged the allegations levelled against the Korean division, but said the company rejects the “implication that the alleged conduct was sanctioned by the most senior management of Novartis Korea.”“This indictment pertains to actions taken by certain associates in Korea which are inconsistent with and not reflective of Novartis’s policies and culture,” the spokesperson for the Swiss drug company told StatNews in an email.
While Novartis said the practices are inconsistent with company culture, this is hardly the first time Novartis has been embroiled in allegations of kickbacks. In March, an anonymous whistleblower in Turkey accused the company of paying bribes to secure $85 million in business advantages in that country. The whistleblower claims Novartis paid a Turkish consulting firm $290,000 over a two-year period to get Novartis medicines added to approved lists for government-run hospitals, as well as “avoiding price cuts in other countries by securing government approval to change the names of two drugs.”
Also in March, Novartis also agreed to pay $25 million to settle charges it violated China’s Foreign Corrupt Practices Act. The company was fined for allegedly bribing health care providers in that country to distribute its drugs. One such allegations involved Novartis’ 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.
Novartis is also facing allegations in the United States that the company hosted about 80,000 “sham” events in which the government maintains the drug company “wined and dined” doctors to prescribe the company’s cardiovascular drugs. 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.
