US government sues Novartis for paying kickbacks to pharmacies

The US government yesterday filed a lawsuit against Novartis Pharmaceuticals accusing the Swiss drugmaker of paying kickbacks to pharmacies to switch kidney transplant patients from generic drugs to its own branded product.

The civil health care fraud lawsuit filed in the district court in Manhattan seeks unspecified damages and civil penalties on allegations that Novartis had since 2005 paid kickbacks disguised as rebates and discounts to at least 20 pharmacies to get them to switch thousands of kidney transplant patients from competitors' drugs to its own immunosuppressant drug Myfortic.

As a result of Novartis' kickback scheme, Medicare and Medicaid have issued tens of millions of dollars in reimbursements based on false, kickback-tainted claims, said Preet Bharara, US Attorney for the southern district of New York.

In an effort to actively conceal the quid pro quo, Bharara alleges that Novartis omitted the agreements with the pharmacies to switch patients to Myfortic or keep them from switching to competitor drugs, while pharmacies hid the financial benefits they stood to gain from physicians, patients, and the federal healthcare programmes, and instead, presented their efforts to switch patients to Myfortic as unbiased professional judgments.

Myfortic, which helps prevent organ rejection in kidney transplant patients, had 2012 sales of $579 million, according to Novartis' annual report.

Novartis kickback scheme violated the federal anti-kickback statute, which prohibits the offer or payment of rebates and other types of remuneration to induce the purchase or recommendation of any drug or service covered by Medicare, Medicaid, or another federal healthcare programme.

 ''As alleged, using the lure of kickbacks disguised as rebates, Novartis co-opted the independence of certain pharmacists and turned them into salespeople for one of its drugs,'' said Bharara.

FBI assistant director Ronald Hosko said, ''The FBI takes these allegations very seriously because of the potential impact to the nation's healthcare system and to the public. These cases are one of the highest priorities of the FBI's health care fraud programme.''

Bharara called Novartis a "repeat offender," referring to the Basel, Switzerland-based company's September 2010 settlement, where it agreed to pay $422.5 million to settle criminal and civil liability for illegally promoting drugs for off-label uses.

Novartis said in a statement yesterday that it disputed the government's allegations and would defend itself in the case.