Novartis said yesterday that it reserved $700 million to settle a long-running U.S. bribery lawsuit, in which the drug maker faces allegations of wining and dining doctors with “sham” speaking events intended to boost prescribing.
According to court documents, these events, which took place a decade ago, were framed as speaker programs but took place in venues not conducive to education: fishing trips along the Florida coast, lavish dinners at high-end Manhattan restaurants, trips to Hooters and others. It is alleged that the company conducted around 80,000 events of this nature between 2002 and 2011, ostensibly asking doctors to speak about products including hypertension drug Lotrel and diabetes med Starlix.
Novartis has frequently denied the accusations, which stem from a whistleblower suit filed in 2011 by a former employee, later joined by the federal government. But the matter has been an overhang for new CEO Vas Narasimhan, who pledged to make ethics a priority and has taken steps such as appointing a new compliance chief last year, just a couple of months into his tenure. The company may be drawing closer to reaching a settlement.
Eric Althoff, a spokesman for the Swiss drug maker, stated: “Consistent with our efforts to resolve legacy compliance-related allegations, we are engaged in settlement discussions to resolve a civil suit challenging speaker programs and other promotional events … The company has provisioned $700 million for any potential settlement.”
CEO offers a Zolgensma coverage update
During a conference call on Thursday, during which the drug maker went over its second-quarter results, Narasimhan also updated investors on the launch of Zolgensma, a gene therapy for the rare disease spinal muscular atrophy (SMA). The treatment was administered to its first U.S. patient on June 7, a mere two weeks after its FDA approval, the company reported.
As of June, only a third of the top 30 insurance companies in the U.S. had made coverage decisions for the therapy, according to a report released by Bernstein analysts last month.
However, Novartis said yesterday that over 20 commercial plans, representing 40% of commercial lives, and four Medicaid plans now have policies on coverage for Zolgensma. The company also reported that 17 commercial plans have already signed the letters of intent on contracting terms.
When asked by an analyst about the number of patients treated with the therapy thus far, the drug maker declined to answer. Narasimhan also held back on giving full-year guidance for Zolgensma.
“With respect to providing full-year guidance, I can’t recall what we did when, but I think with Zolgensma, we’re focused on getting the fundamentals in place, getting a very strong launch, and getting as many patients as possible in […] So we’re not going to give any guidance, but anyway, you’ll see it all in Q3,” the CEO said.
Execs added that the firm is beginning conversations with the FDA to secure approval for intrathecal dosing of the SMA therapy, which would pave the way for its use in older populations, and that they expect to lock down EU and Japan approval by year’s end. Plans call for the drug maker to begin working on other country filings in the third quarter as the medicine rolls out globally.
The company’s second-quarter sales rose 8% to $11.8 billion, and core operating income increased 20% to$3.6 billion. Revenue was boosted by sales of inflammation drug Cosentyx, which increased 1.5% compared to the year-ago quarter, reaching $858 million.
Heart failure drug Entresto saw an 81% revenue increase from last year’s second quarter, reaching $421 million, with substantial growth both inside and outside the U.S. The drug’s initial launch had been hampered by lack of payer coverage.
The firm also raised its full-year sales forecast, with sales expected to come in the mid-to-high single digits, vs. previous guidance for a mid-single-digit percentage. Guidance for the company’s Sandoz generics business was also raised and is expected to reach low single-digit growth.