The Department of Justice has sufficient evidence to proceed with a whistleblower suit against Novartis AG that alleges violations of the federal anti-kickback statute and the False Claims Act, a federal court ruled Sept. 30, meaning the company now will need to choose between going to trial or negotiating a settlement.

The ruling comes as Novartis is also being investigated by the government in other cases involving FCA allegations including a case that alleges the company paid kickbacks to owners of specialty pharmacies to persuade them to recommend Novartis drugs to patients ([A#14140210004]).

The government intervened in the whistleblower suit in April 2013, which alleges that Novartis systematically bribed doctors with “upscale social outings” over a period of nearly nine years to induce them to prescribe the company’s cardiovascular drugs, causing false claims for reimbursement for prescriptions to be submitted to federal and state health care programs.

The drugs include Lotrel (amlodipine/benazepril), Diovan (valsartan), Diovan HCT (valsartan/hydrochlorothiazide), Tekturna (aliskiren), Tekturna HCT (aliskiren/hydrochlorothiazide), Exforge (amlodipine/valsartan), Exforge HCT (amlodipine/valsartan/hydrochlorothiazide), Valturna (aliskiren/valsartan), Tekamlo (aliskiren/amlodipine) and Starlix (nateglinide).

Novartis tried to get the suit dismissed on a number of grounds, including that the government’s claims were deficient because they rely on only a handful of examples to allege a nationwide kickback scheme, did not demonstrate the company acted with knowledge of wrongdoing, and improperly premised the alleged anti-kickback violations on violations of the company’s internal policies and the Pharmaceutical Research and Manufacturers of America’s code on interactions with health care professionals.

However, Judge Paul Gardephe of the U.S. District Court for the Southern District of New York refused to grant the dismissal, saying the government has described the alleged kickback scheme with enough particularity and specificity to move forward. The state of New York has intervened in the case as well.

Echoes From Previous Novartis Violations

The complaint names some activities with the drugs that it says Novartis did not disclose when the company reached a settlement with the government in 2010 to resolve another DoJ investigation that also involved allegations of kickbacks and false claims. That settlement resulted in a Corporate Integrity Agreement with HHS’ Office of Inspector General in which the company agreed to implement a rigorous compliance program to comply with the anti-kickback statue and the FCA Also see "Novartis Settlement Encompasses Whistleblower Claims Of Kickbacks For Diovan Prescribing" - Pink Sheet, 1 October, 2010..

Further, the whistleblower claims Novartis continued its unlawful practices even after the 2010 settlement.

Novartis is accused of hosting “sham” speaker events, where it was supposedly paying doctors to educate other physicians and health care professionals about Novartis drugs with slides prepared by the company.

However, these events, which were organized and conducted by company sales representatives, included little or no time discussing the drugs at hand and “served as little more than upscale social outings designed to induce doctors to write prescriptions for Novartis drugs,” the government alleges.

Many of the events were hosted in inappropriate locations for educational events, including locations where it would have been difficult or impossible for attendees to hear a speaker or for a presenter to show slides, including “round table” programs at Hooters restaurant and fishing trips. In some cases, some of the events reflected in Novartis’ records never took place, yet the designated speakers were still compensated, the allegations say.

Groups of the same doctors would repeatedly attend events on the same topic within a short period of time, with doctors taking turns in the role of attendees and speakers, DOJ said.

Meanwhile, the government says Novartis’ internal analysis showed the speaker programs had a high return on investment, with both speakers and attendees of such events increasing the number of prescriptions for Novartis drugs.

The company spent more than $65 million on more than 38,000 speaker programs supposedly about Lotrel, Starlix and Valturan between Jan. 1, 2002, and Nov. 2011.

The references to the company’s 2010 settlement and CIA may not bode well for Novartis as the HHS’ OIG has already said it is investigating whether other kickback allegations against the company may make Novartis in violation of its CIA Also see "Health Care Fraud Tipsters May Get Bigger Reward; Novartis Kickback Complaint Prompts CIA Review" - Pink Sheet, 25 April, 2013..

Specifics Of Each Action Not Needed, Judge Says

The judged ruled that the government provided sufficient information for the current whistleblower case to proceed, including tying particular claims to particular doctors during the time period those doctors were attending the events.

The judge also held that courts in its circuit have ruled that, in cases where an alleged fraudulent scheme is extensive and involves numerous transactions over a long period of time, it is impractical to require the specific information for each instance of fraudulent conduct and that only representative samples are necessary.

He also said the government put forth more than mere violations of internal Novartis or PhRMA polices and ruled that the government’s pleadings “support a strong inference that the doctors recognized that the Novartis speaking events were shams” and that they “knowingly and willfully violated the anti-kickback laws when they wrote prescriptions for Novartis drugs in exchange for this remuneration.”

The judge did grant Novartis’ motion to dismiss the off-label promotion claims alleged by the whistleblower, a complaint the government did not join. And it dismissed some of New York’s claims related to conduct occurring prior to Aug. 26, 2010, because a three-year statute of limitations applies.

In response to the ruling Novartis said it “disputes the allegations and will continue to vigorously defend itself in this litigation.” It also said it “believes speaker programs can help educate other health care providers about the appropriate use of medicines so they can make informed prescribing decisions, which in turn enhances patient care,” adding that it is committed to ethical business conduct and has a comprehensive compliance program in place.

Kickback Suit Against Novartis Can Proceed, Judge Says

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