Pharmaceutical Company Sued—Again—for Paying Kickbacks

Manufacturing an excellent product and marketing it well should ensure commercial success. A new lawsuit suggests that it wasn’t for Big Pharma player Novartis AG-the company was charged last month with fraud, allegedly for paying kickbacks to pharmacies that switched transplant patients from a less expensive generic drug to to its brand name med, Myfortic.

Paying kickbacks, it seems, seems to be part of the Novartis business plan: In the same week, the U.S. intervened in a private suit from 2011 that claims the company allegedly crossing the palms of physicians with the intent of increasing sales two drugs that treat hypertension, Lotrel and Valturna, and its diabetes drug Starlix.

According to the stories on, Novartis, was sued in federal court last month for violating the False Claims Act. That’s the same law Lance Armstrong is accused of violating for defrauding the U.S. by using banned substances when he was sponsored by the U.S. Postal Service.

For seven years, the U.S. says, the Myfortic payments were disguised as rebates and discounts to at least 20 pharmacies that switched patients to Myfortic from drugs sold by other companies. The cost to Medicare and Medicaid was tens of millions of dollars in false claims, the complaint says.

The damage isn’t just financial-patient safety is at issue. “Hundreds, possibly thousands, of transplant patients have undergone switches in their medication as a result of recommendations from pharmacies that were based on undisclosed financial, rather than independent clinical, considerations,” according to the complaint.

Myfortic is an immunosuppressant that helps prevent organ rejection for kidney transplant patients. The drug competes with another manufacturer’s drug, CellCept, which has been available as a generic since 2009. In 2011, Bloomberg reports, Medicare reimbursed Myfortic at more than twice what it did for generic CellCept.
In the older lawsuit, Novartis supposedly treated physicians to luxe dinners, fishing trips, outings at Hooters (class acts!) and provided speaker fees to juice sales; that is, they’re accused of buying physician prescribing loyalty. That commitment should be borne only of science and patient communication. The U.S. says Medicare, Medicaid and other federal health-care programs paid millions for these kickback-inspired claims as well.

In the Myfortic complaint, the U.S. called Novartis a “repeat offender. So, are the penalties for this skanky behavior insufficient, or is Big Pharma just too big to notice them? It wasn’t even three years ago, according to Bloomberg, that Novartis agreed to pay $422.5 million to settle charges that it paid kickbacks and illegally promoted drugs for off-label uses (that is, to treat problems for which the FDA had not given approval; doctors are allowed to prescribe drugs for off-label use, but manufacturers are not allowed to market them for such uses).

We’ve examined the idea that for pharmaceutical companies, paying penalties for illegal drug promotion is just a cost of doing business, and that some doctors are expert practitioners of going to the pharma well.

As part of the 2010 deal, Novartis signed a five-year corporate integrity agreement with the U.S. Department of Health and Human Services requiring promotional activity reforms. The document said that Novartis could be excluded from federal health-care programs for a “material breach.”

We’re waiting.

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