What happens when a company uses kickbacks to boost sales of drugs? They are liable to pay fines and damages in the millions or even in the billions of dollars!
False Claims Act Violation – over $3 Billion in Fines and Damages
According to documents filed in federal court in New York, another drug company, Novartis, used kickbacks to boost the sales of two drugs. This caused the federal health care programs to overpay for medicine. The U.S Department of Justice claims Novartis should pay up to $3.35 billion in damages, including $1.52 billion in damages and $1.83 billion in fines. The Justice Department tripled the amount of money Medicare and Medicaid paid for the drugs as a result of kickbacks between 2004 and 2013.
False Claims Act Violation
The two drugs are the Myfortic treatment for kidney transplants and Exjade which is used for patients with blood transfusions. Novartis reportedly used rebates and different plans to induce specialty pharmacies to boost prescriptions. This is a violation of the False Claims Act.
According to court documents, a whistleblower lawsuit was filed by a former Novartis employee, alleging Novartis paid for lavish trips. It also claimed that speaker dinners given for doctors were purportedly kickbacks used to induce them to prescribe Novartis drugs. The feds joined this lawsuit.
Another Whistleblower lawsuit against Novartis
In 2011, a former Novartis sales manager, David Kester, filed a whistleblower lawsuit. About a dozen states and the Justice Department joined the litigation. A trial date for the lawsuit brought by the feds is set to start in November.
Why has this case been so closely watched?
A key issue is the extent to which a so-called Corporate Integrity Agreement (CIA) that Novartis signed in 2010 might factor into the proceedings. Such agreements usually run for five years and require companies to establish internal compliance programs and report violations.
When the lawsuit against Novartis was announced two years ago by Preet Bharara, a U.S. Attorney in New York, Bharara called Novartis a “repeat offender”. The law suit did note that the violations alleged in the litigation took place before and after the CIA was signed.
What happens if Novartis loses the case?
The drug maker, Novartis, could potentially face being excluded from having contracts with federal health care programs – resulting in a large loss of revenue.
However, if they are excluded, it could unnecessarily harm many patients, as Novartis provides numerous needed medications.
We will keep you posted about the events and outcome of this large False Claims Act case.