U.S. Sues Novartis Over Medicare Fraud

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On Tuesday, the U.S. government filed a civil fraud lawsuit accusing a unit of Novartis AG of orchestrating claims based on fraudulent kickbacks and causing Medicare and Medicaid programs pay tens of millions of dollars. The suit was filed in the U.S. District Court in Manhattan. It seeks civil penalties and damages from Novartis for violating provisions of the federal False Claims Act.

U.S. Attorney Preet Bharara in Manhattan said that since 2005, Novartis Pharmaceuticals Corp had provided kickbacks under the guise of rebates and discounts to induce at least 20 pharmacies put thousands of kidney transplant patients on Myfortic, the immunosuppreassant drug marketed by Novartis. Bharara said Novartis attempted to hide the kickback scheme by not mentioning the agreements in the discount and rebate contracts with the pharmacies.

Bharara stressed, “Novartis co-opted the independence of certain pharmacists and turned them into salespeople.”

  

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He also said Novartis was a “repeat offender” which had settled health care fraud charges based on kickbacks in Sept. 2010. At the time, Novartis had agreed to pay $422.5 million to resolve all civil and criminal liability over the marketing of a number of drugs including Trileptal.

At least in one case, the complaint mentioned, that Novartis had offered a pharmacist in Los Angeles a bonus rebate of 5 percent of the pharmacy’s annual Myfortic sale. By switching as many as 1,000 patients to Myfortic, the pharmacy gained several hundred thousand dollars in the form of bonus rebates.

According to Novartis’ annual report, net sales of Myfortic totaled $579 million in 2012, experiencing a 12 percent growth against 2011.

Recently Novartis AG was in the news after the top court of India dismissed its bid to protect its patent rights over its cancer relieving drug Glivec.

The case is U.S. v. Novartis Pharmaceuticals Corp, U.S. District Court, Southern District of New York, No. 11-08196