Novartis In Deep Trouble As Allegations And Whistleblowers Come Forward

The Swiss drug maker Novartis (NVS) has come under the line of fire. The company has been under investigation since the past 11 years and now the Justice Department and 11 U.S states have filed a False Claims lawsuit in which they are demanding $3.4billion in damages and fines.

This is the highest claim ever filed against a pharmaceutical company, and if won by state prosecutors it will surpass the GlaxoSmithKline’s case, in which $3 billion worth damages were claimed by the Justice Department and a number of U.S states.

The rates are so high because the alleged kickbacks have cost the government more than 166,011 through Medicare and Medicaid claims, and more than $500 million in government payments for those scripts.

In addition to that the government is demanding $1.83 billion in fines, $11,000 on top of every one of the 116,011 false claims.

However the company’s spokeswomen Julie Masow said Novartis has been disputing these allegations and will continue to do so in the litigation, she went on to say that the company is looking forward to the presentation of the entire evidence during the trail.

Novartis has not been blamed for financial payments to doctors but the allegations are on Novartis pharmacy relationships. The company has been blamed for offering special deals to pharmacies to boost prescriptions of its transplant drug Myfortic in comparison to its competition, Roche’s drug CellCept. It has also been blamed for setting up deal in order to increase refills of its iron chelating drug Exjade.

Novartis got some more bad news last year when Bio Scrip, a company that provides pharmaceutical and pharmacy benefit management services, said that it urged patients to buy Exjade refills and in return Novartis provided more patient referrals and higher rebates. BioScrip agreed to detail its financial relationship with Novartis and to pay $15million in damages.

Novartis has also been blamed for tempting pharmacists with discounts and rebates for Myfortic switches. As stated in the FED’s original FCA lawsuit the company offered a LA pharmacist a 5% bonus rebate on its annual Myfortic sale if he agreed to switch 700 to 1000 patients to the drug from other treatments.

Last October’s lawsuit claimed that Novartis spent huge amounts of money on entertaining certain physicians in exchange for increased prescriptions. Claims were made that Novartis salespeople spent tens of thousands of dollars on dinners for doctors. Apparently the same physicians showed up every time for educational presentations and then they increased script numbers on cardiovascular meds Lotrel and Valturn, along with the diabetes drug Starlix.

U.S Attorney Preet Bharara stated in his allegations in 2013 that Novartis “co-opted the independence of certain pharmacists and turned them into salespeople for one of its drugs.”

The trail is set for 2nd November, but most FCA allegations aren’t resolved through this method and involve settlements for whistleblower, also the large sum of money demanded from Novartis could be a way to put pressure on them so they make a deal.

Meanwhile Novartis is fighting the allegations.

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