Novartis – At it Again with Kickbacks Disguised as Rebates and Discounts

Last week, the US Department of Justice (DOJ) filed 2 federal lawsuits against Novartis.  One complaint seeks damages and civil penalties for corrupting the dispensing process with multi-million-dollar ‘incentive programs’ that targeted doctors. The other involves kickbacks in the form of rebates and discounts to at least 20 pharmacies in exchange for switching transplant patients from rival medicines to its Myfortic, an immunosuppressant treatment used to prevent rejection of kidney transplants.

The allegations have a familiar ring, given that the feds have made similar charges against many drug makers over the past decade. Payments and ‘lavish’ dinners given to doctors were purportedly kickbacks to seminar speakers and attendees to induce them to prescribe different Novartis meds. However, the feds say, some programs never actually took place or, if they did, doctors never spoke about the drug at issue.

This is the second time Novartis itself has been hit with this type of lawsuit.  The first was settled in September, 2010.  It specifically included Sandostatin as one of the drugs that the company was paying kickbacks to doctors to prescribe.  I discussed this in my blog post titled “Who’s Paying Your Doctor?” on June 24 2012.

The link to the 2010 case is below:

http://www.justice.gov/opa/pr/2010/September/10-civ-1102.html

As part of the 2010 settlement, Novartis signed a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). The company is subject to exclusion from Federal health care programs, including Medicare and Medicaid, for a material breach of this CIA and subject to monetary penalties for less significant breaches. 

As the feds make clear in their recent lawsuits, the alleged kickbacks to doctors and pharmacists took place before and after the CIA was signed. This is a potentially huge problem, because it could mean that Novartis may face exclusion as defined above.

I am not sure exactly how exclusion works but if some of the Novartis drugs that were involved in these lawsuits, particularly Sandostatin, become excluded from the list of drugs used by Medicare/Medicaid, this would be devastating to cancer patients. Exclusion, while it is a strong motivator to change behavior, would seriously impact patients who rely on the Federal programs for their healthcare.  An alternative to exclusion might be to have the DOJ force Novartis to provide these drugs to Medicare/Medicaid at no cost.  This would hurt Novartis but would not cause patients to suffer.  I'm not sure if this is legal but it makes no sense to harm patients because of wrongdoing by Novartis, pharmacists and doctors.

Meanwhile, the DOJ goes on filing civil lawsuits against drug companies that continue to settle for higher and higher amounts of monetary penalties while denying any culpability.  Perhaps stronger remedies are needed including criminal penalties and prosecutions. 

This story is outrageous! Unfortunately, Novartis is not the only pharmaceutical company to face these charges.  It amazes me how these lawsuits/stories are filed on Fridays so there is not much media coverage of it over the weekend.  This is an age old public relations gimmick that still seems to mislead the public.

Source material:  Forbes: http://www.forbes.com/sites/edsilverman/2013/04/27/did-novartis-violate-its-corporate-integrity-agreement/

The New York Times:  http://www.nytimes.com/2013/04/28/opinion/sunday/another-alleged-drug-kickback-scheme.html?partner=rssnyt&emc=rss&_r=0