Last week, the United States Department of Justice (DOJ) announced a $642 million settlement with Novartis over improper payments to patients and physicians. The $642 million sum is for two different settlements – the first over the company’s alleged illegal use of three foundations as conduits to pay copayments for Medicare patients taking Novartis’ drugs Gilenya and Afinitor and the second over the company’s alleged payments of kickbacks to doctors.
First Settlement – Illegal Foundations
Under the first settlement, Novartis allegedly illegally paid copay obligations for patients taking Gilenya and Afinitor. According to the government, Novartis learned from Express Scripts that Novartis was providing free Gilenya – a multiple sclerosis drug – to 364 patients who would become Medicare eligible in 2013. Therefore, Novartis and Express Scripts transitioned the patients to Medicare Part D and Novartis developed a plan with The Assistance Fund (TAF) so that Novartis could cover the copays for Medicare patients who could not afford their Gilenya copays. At the same time Novartis made a payment to TAF, Novartis arranged for TAF to open its multiple sclerosis fund at 6:00 PM on a Friday in December 2012 and for Express Scripts to have personnel working overtime that night and the following morning to submit applications for patients who had been receiving free Gilenya. When Novartis took this action, it knew that the coordination would result in a disproportionate share of its funding going toward Gilenya patients for 2013.
Similarly, with Afinitor (a treatment for advanced renal cell carcinoma (RCC) and progressive neuroendocrine tumors of pancreatic origin (PNET)), Novartis allegedly learned that for the 2010 donation year, it would be the only donor to an RCC copay assistance fund set up by a charitable foundation (National Organization for Rare Disorders – NORD). Novartis allegedly told NORD it would be willing to donate to the fund only if the eligibility for funds from the foundation were narrowed to ensure a greater amount of the copay assistance would go to patients taking Afinitor. Therefore, the government alleged, by narrowing the fund definition, the fund disproportionately helped patients taking Afinitor as compared to its overall usage rate among RCC drugs. Then, in 2012, Novartis allegedly asked another foundation (Chronic Disease Fund – CDF) to open a copay assistance fund to pay copays for PNET patients – which Novartis knew would be used to only pay copays of Afinitor patients.
To settle these allegations, Novartis will pay $51.25 million.
Second Settlement – Kickbacks to Doctors
Then, in the second settlement, Novartis will pay $591.4 million to resolve False Claims Act (FCA) allegations that it paid kickbacks to entice doctors to prescribe several Novartis drugs, including Lotrel, Valturna, Starlix, Tekturna, Tekturna HCT, Tekamlo, Diovan, Diovan HCT, Exforge, and Exforge HCT. Also under this settlement, Novartis will forfeit $38.4 million under the Civil Asset Forfeiture Statute.
In a qui tam suit filed in the Southern District of New York, the United States alleged that Novartis hosted tens of thousands of speaker programs and related events under the guise of providing educational content, when in reality, the events served as a means to provide bribes to doctors via honoraria. Some of the so-called speaker events never even took place; the speaker was simply paid a fee in order to induce the speaker to prescribe Novartis drugs.
The government’s complaint also alleged that Novartis sales representatives, based on instruction from their managers, picked high-volume prescribers to serve as the paid “speakers” at these events with the intent to induce them to write more (or keep writing many) Novartis prescriptions. The sales representatives would then pressure the speakers to increase their prescriptions of Novartis drugs, and would drop doctors from the speaker program if they failed to increase their prescriptions. The government also alleged that this kickback scheme came all the way from decisions made by top management at Novartis’s North American headquarters in New Jersey.
The New Corporate Integrity Agreement
Contemporaneous with settling the FCA claims, Novartis entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG). Among many things, the CIA requires that Novartis significantly reduce its paid speaker programs and the amount spent on the programs. Further, any remaining speaker programs may only occur under limited circumstances (may only occur within 18 months of the FDA approval of a new Government Reimbursed Product or a new indication for a Government Reimbursed Product previously approved by the FDA) and in a virtual format (external speakers must be remote and cannot be in the same location as any audience member). Additionally, there is a limit of $100,000 in total remuneration for speaking and speaker training and a $10,000 total remuneration cap per speaker (excluding any direct payment by Novartis for travel and travel-related expenses).
Novartis is also required to implement measures to promote independence from patience assistance programs under the CIA and a multi-faceted monitoring of Novartis’ obligations will be required. Additionally, company executives and board members will be required to certify compliance with the CIA.
This CIA seems to be very company-specific, as compared to other CIAs which tend to use boilerplate language.
Interestingly, the activities that served as the basis of the two settlements happened shortly after Novartis entered into a CIA with HHS-OIG in 2010, which was then extended based on a November 2015 settlement for another five years, concerning specialty pharmacies.
For More Information
For a more in-depth review of the case and the CIA, be sure to check out our upcoming issue of Policy & Medicine Compliance Update.