Swiss pharmaceutical drug maker Novartis announced it has set aside $700 million for a potential settlement in a long-running lawsuit over allegations that the company paid hundreds of millions of dollars in kickbacks to doctors to induce them into prescribing drugs to patients to boost their sales.
The Department of Justice has filed a complaint in the U.S. District Court for the Southern District of New York following a lawsuit originally filed under the whistleblower provisions of the False Claims Act. The case was brought by a former Novartis sales representative, Oswald Bilotta.
In the lawsuit, U.S. ex rel. Bilotta v. Novartis Pharmaceuticals, the government alleged Novartis paid hundreds of millions of dollars of kickbacks to prescribers in the form of lavish meals and entertainment. The government further alleged Novartis sponsored “sham” educational programs at high-end restaurants between 2002 and 2011 that, in actuality, were intended to entertain doctors to induce them to prescribe Novartis drugs.
Novartis has denied wrongdoing. Nonetheless, Novartis Chief Executive Officer Vas Narasimhan confirmed in a July 18 investor call that the company is setting aside funds for the settlement. “We’ve taken the legal provision of about $700 million related to the Southern District case,” Narasimhan said. “We’ve taken the provision in the context of the ongoing settlement discussions.”
“We can’t comment further as the discussions are ongoing,” Narasimhan added. “Once we have a further update we will, of course, provide it.”
Novartis is working hard to clean up its tainted reputation, as the company faces several other government investigations around the world for a laundry list of compliance violations, including kickback claims, off-label promotion practices, healthcare fraud, collusion, and more. Authorities in Greece, for example, are looking into allegations that Novartis paid kickbacks to more than 4,000 doctors and government officials in exchange for the promotion of Novartis’s drugs.