Novartis sued for alleged speaker-program abuse

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In the second civil-fraud lawsuit in a week to be lodged against Novartis involving alleged kickbacks, the Justice Department accused the Swiss drug maker's US unit of offering opulent dinners and paying physicians as an enticement to prescribe its drugs.

The government's lawsuit filed Friday names several venues where the exchange of medical information allegedly took place, but where it “would have been virtually impossible for any presentation to be made.” These included Florida fishing trips, meals at Hooters restaurants, and dinners at upscale eateries.

Novartis claimed its speaker programs are “promotional programs” designed to inform physicians about appropriate use of medicines. It also took issue with allegations in a case filed a few days earlier by the US government alleging Novartis incentivized pharmacies to switch transplant patients from competitor drugs to a Novartis product, Myfortic.

“We disagree with the way the government is characterizing our conduct in both of these matters and we stand behind our Compliance program,” said the president of Novartis' US pharmaceuticals unit, André Wyss, in a statement issued Friday.

Among the speaker programs attracting DOJ attention: A July 5 dinner for three, including the speaker, at a Washington, DC, restaurant cost $2,016, or $672 per person, with a $1,000 honorarium paid to the speaker (one of the two attendees had attended the same program a short time earlier); and a program held on Valentine's Day in 2006 in which two attendees ran up a $3,127 tab for a meal at a West Des Moines, Iowa, eatery.

According to Novartis data cited in the complaint, during the period from January 2002 through November 2011, the firm spent nearly $65 million and held more than 38,000 speaker programs for just three drugs: hypertension drugs Lotrel and Valturna and its diabetes drug Starlix.

The government said the company, which had been operating under a corporate integrity agreement since 2010 after settling False Claims Act lawsuits based partly on anti-kickback violations involving speaker programs, was lax in ensuring that the programs were for a legitimate purpose. Its complaint, filed in the Southern District of New York, alleges these events “were often little or nothing more than social occasions for the doctors.”

In many cases, the payments to doctors were for speaker programs that either did not occur at all or had few attendees, the complaint charges. “Thousands of programs occurred where few or no slides were shown,” and participants spent little or no time discussing the drug at hand, the government argues, making the payments “nothing more than kickbacks.”

The complaint, brought under whistleblower provisions of the False Claims Act by a former Novartis sales rep, seeks treble damages and penalties under the Act. The US joined the lawsuit, called United States ex rel. Bilotta v. Novartis Pharmaceuticals Corporation et al., No. 11-cv-0071 (S.D.N.Y.).

Novartis told MM&M the investigation was first disclosed in its 2011 full-year results press release in January 2012. Its 2012 20-F, filed with the SEC in January of this year, notes that its US subsidiary Novartis Pharmaceuticals Corp. (NPC) received a subpoena from the US Attorney's Office requesting the production of documents relating to marketing practices, including the remuneration of healthcare providers in connection with the three products. It said the company is cooperating with the investigation, “which is civil and criminal in nature.”

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