Swiss pharmaceutical drug maker Novartis announced it will pay $678 million to end a long-running civil lawsuit regarding allegations of hundreds of millions of dollars paid in kickbacks to doctors to induce them into prescribing drugs to patients to boost Novartis sales.

In July 2019, the Department of Justice 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 denied wrongdoing.

On Thursday, Novartis announced it has resolved the civil lawsuit with the U.S. Attorney’s Office for the Southern District of New York, the New York State Attorney General, and Bilotta.

“For more than a decade, Novartis spent hundreds of millions of dollars on so-called speaker programs, including speaking fees, exorbitant meals, and top-shelf alcohol that were nothing more than bribes to get doctors across the country to prescribe Novartis’s drugs,” said Acting U.S. Attorney Audrey Strauss for the Southern District of New York in a press release.

Compliance enhancements

In addition to paying $678 million, Novartis said it has agreed to new corporate integrity obligations with the Office of Inspector General (OIG) of the U.S Department of Health and Human Services “that will change how the company delivers peer-to-peer programs in the United States.”

Novartis said it expects its new initiatives “will resonate more with the way people learn in the digital era,” explaining that it “will transition its physician education programs predominantly to digital formats and use paid external physicians only in limited circumstances. The use of digital tools will allow Novartis to offer rich and interactive content, in some cases including peer-to-peer instruction, which physicians can engage with at their convenience.”

Novartis added that peer-to-peer medical education remains an important aspect of the company’s educational objectives. “Since 2011, Novartis has enhanced its peer-to-peer medical education programs to meet the evolving expectations of the industry and stakeholders around the world,” Novartis said. “Going forward, Novartis will set the standard by embracing new, digitally enabled education programs that will support better outcomes for patients.”

Novartis will transform its sponsored peer-to-peer medical education in the United States by:

  • Transitioning predominantly to digital/virtual formats;
  • Significantly limiting the instances in which it pays external healthcare professionals to deliver education; and
  • Taking additional steps to comprehensively foster compliance, including eliminating the use of restaurants as venues.

Other settlements

Additionally, Novartis said it has finalized its previously disclosed agreement with the Justice Department and the U.S. Attorney’s Office for the District of Massachusetts “to resolve an investigation related to the company’s support of certain independent charitable co-pay foundations (ICCFs) from 2010 to 2014.” As part of this settlement, Novartis will pay $51.25 million and has agreed to additional corporate integrity obligations with OIG to further enhance its controls relating to its interactions with ICCFs.

“Today’s settlements are consistent with Novartis commitment to resolve and learn from legacy compliance matters,” said Novartis CEO Vas Narasimhan. “We are a different company today—with new leadership, a stronger culture, and a more comprehensive commitment to ethics embedded at the heart of our company. I have been clear that I never want us to achieve commercial success at the expense of our values—our values must always come first and are the foundation of everything we do.”

On June 25, Novartis agreed to pay nearly $347 million in combined criminal and civil penalties to resolve Foreign Corrupt Practices Act investigations into historical conduct by the company and its subsidiaries. Those FCPA investigations by the Justice Department and the Securities and Exchange Commission arose out of a bribery scheme concerning the sale of Novartis and Alcon products.

Jaclyn Jaeger is a freelance contributor to Compliance Week after working for the company for 15 years. She writes on a wide variety of topics, including ethics and compliance, risk management, legal, enforcement, technology, and more.

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