Business

Novartis AG pays $729 million to settle US kickback charges

Updated : July 02, 2020 12:08 PM IST

Novartis AG agreed to pay more than USD 729 million to settle US government charges it paid illegal kickbacks to doctors and patients to boost drug sales, the US Department of Justice said on Wednesday.

The Swiss drugmaker will pay USD 678 million to resolve claims it organized tens of thousands of sham educational events where it lavished doctors with exorbitant speaker fees, expensive dinners and alcohol to induce them to prescribe its cardiovascular and diabetes drugs more often.

It will also pay USD 51.25 million to resolve charges it funneled money through three charitable foundations to cover co-payments of Medicare patients so they would purchase its drugs.

Both settlements resolved civil charges that Novartis violated the federal False Claims Act.

Acting US Attorney Audrey Strauss in Manhattan called the incentives for doctors "nothing more than bribes," and said federal healthcare programs paid hundreds of millions of dollars in reimbursements for prescriptions tainted by kickbacks.

"Giving these cash payments and other lavish goodies interferes with the duty of doctors to choose the best treatment for their patients and increases drug costs for everyone," Strauss said in a statement.

The Justice Department said the speaker programs and other promotional events occurred from 2002 to 2011, while the co-payments were made from 2010 to 2014.

In connection with the settlements, Novartis agreed to curtail its speaker programs and enter a five-year corporate integrity agreement.

It also accepted responsibility for many allegations underlying the larger settlement, for which it set aside funds in July 2019.

"We are a different company today -- with new leadership, a stronger culture and a more comprehensive commitment to ethics," Chief Executive Vas Narasimhan said in a statement.

The USD 678 million payout includes USD 591.4 million in damages to the US government, a USD 38.4 million forfeiture for violating an anti-kickback statute and USD 48.2 million to US states.

Novartis AG pays $729 million to settle US kickback charges

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