On September 14, 2020, California Attorney General Xavier Becerra announced an $11.8 million settlement against Novartis Pharmaceutical Corporation related to Anti-Kickback Statute and False Claims Act violations. According to the allegations, from January 2002 through November 2011, Novartis engaged in a kickback scheme by offering cash payments, meals, and honoraria to healthcare practitioners that impacted Medicare and Medi-Cal beneficiaries. Novartis allegedly offered these kickbacks to encourage practitioners to prescribe certain Novartis products, including Lotrel, Valturna, Starlix, Tekamlo, Diovan, Diovan HCT, Tekturna, Tekturna HCT, Exforge, and Exforge HCT.
In the settlement, Novartis admitted that between January 2002 and November 2011, it held meetings and events as part of its marketing efforts for the above-named drugs, including events such as speaker programs and roundtables. Novartis also admitted that many sales representatives that worked for the company were “specifically evaluated in their annual reviews” on how much of their budget for promotional programs they used. If a sales representative did not use all of his/her budget, “that could be a negative factor in his/her annual review.”
The settlement also concedes that Novartis gave prescribing data to its sales representatives that showed the number of prescription for Novartis and competitor drugs that were written by doctors within their territories – the reps would then use the prescribing data to identify high-volume prescribers and track their prescriptions over time. Then, some Novartis sales representatives took it a step further and would pinpoint high-prescribing doctors to become speakers and “intended the honoraria paid to induce these doctors to continue to write or write more Novartis products.”
Additionally, Novartis admits that during the Relevant Period, more than 12,000 speaker programs and roundtables had meal spends that were “considerably in excess of the $125 per person limit” found in Novartis’ compliance policies. An example in the settlement is a 2008 speaker program held at Ruth’s Chris Steakhouse in Pikesville, MD: only one doctor was in the audience for the presentation and $448 was spent per person on food and alcohol and the speaker was paid a $1,000 honorarium. Then, at a 2008 dinner at Skye Restaurant in Peoria, AZ, Novartis spent $521 per person for food and alcohol. At a 2008 dinner at Danton’s Gulf Coast Seafood Restaurant in Houston, TX, $680 per person was spent on food and alcohol.
In addition to the known events where the spend exceeded Novartis’ policy, there were instances where the internal records understated how much was spent per doctor at each event, as Novartis employees falsified records.
This settlement follows the $591.4 million settlement Novartis made earlier this year with the United States Department of Justice.
“Kickbacks are illegal, they increase prices for consumers — and they cost you dearly once you’re caught. Novartis is the latest company we caught cheating,” said Attorney General Becerra. “In holding Novartis accountable, our state’s Medi-Cal recipients and our taxpayers win to the tune of over $11.8 million.”