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Novartis Settles $390M for Kickback Scheme

Novartis Pharmaceuticals Corporation ("Novartis") currently faces several False Claims Act ("FCA") charges for its alleged kickback schemes. Recently, Novartis has agreed to pay out $390 million to settle one of its major cases, which claimed it incentivized specialty pharmacies to increase sales of Exjade, an iron-reducing drug, and Myfortic, an immunosuppressant.

The suit, captioned as U.S. ex rel. Kester et al. v. Novartis Pharmaceuticals Corp., Case No. 1:11-cv-08196 (S.D.N.Y.), was originally filed by a former sales manager of Novartis, David Kester ("Kester") in 2011 and was later joined by the U.S. Department of Justice in 2013. In a detailed admission to the New York federal court, Novartis stated that it threatened to cut ties with at least one pharmacy that was not dispensing enough of its medicines and steered patients and bonus payments to pharmacies that were generating refills, particularly those that were paid for by Medicare and Medicaid. As the whistleblower, Kester is expected to receive 15 to 30 percent of the payout. The overall breakdown of the settlement includes $370 million in FCA proceeds and $20 million in civil forfeiture. Of the FCA proceeds, $287 million will go to the federal government, while the remaining $83 million will go to various states.

James E. Miller and Laurie Rubinow, along with a team of other SFMS lawyers, are currently lead counsel on a separate qui tam case against Novartis in Bilotta v. Novartis Pharmaceuticals Corporation et al., 11-CV-0071 (S.D.N.Y.). SFMS has partnered with the U.S. Department of Justice and the New York Attorney General's Office to pursue claims against Novartis for fraudulently billing Medicare, Medicaid, TRICARE, and other federal and state-funded healthcare programs by Novartis' Cardiovascular Diseases Division through a wide array of kickback and unlawful marketing schemes. This qui tam case alleges that Novartis arranged "speaker programs" that were nothing more than social occasions in order to disguise paying physicians to induce them to prescribe certain Novartis pharmaceutical products that were reimbursed by federal healthcare programs.

The legal team at SFMS has substantial experience litigating FCA matters. If you have any questions regarding this subject or this posting, please contact Chiharu Sekino (csekino@sfmslaw.com) or Alec Berin (aberin@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP, is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS also maintains affiliate offices in London, England, and Milan, Italy, and is an active member of Integrated Advisory Group (www.iaginternational.org), which provides our firm with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

SOURCES

Overley, Jeff. "Novartis Faces Strict Pharmacy Oversight In $390M Deal." Law 360. Last modified on November 20, 2015.

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