Novartis Will Pay $678 Million Over Healthcare Fraud, Whistleblower Award Could Surpass $70 Million

Novartis Will Pay $678 Million Over Healthcare Fraud, Whistleblower Award Could Surpass $70 Million

Novartis will pay $678 million to settle claims that it paid illegal kickbacks to health care practitioners to induce them to prescribe its cardiovascular and diabetes drugs. The alleged misconduct defrauded the federal government and at least 29 states.

The alleged fraud was brought forward in a whistleblower lawsuit filed by Oswald Bilotta in 2011. The complaint stated that Novartis induced prescriptions of its drugs in violation of Medicare rules and the rules of the Medicaid programs in Nevada, Florida, Texas, Washington, Colorado, New Mexico, New York, California, Montana, Rhode Island, Connecticut, Indiana, Louisiana, Tennessee, Virginia, Wisconsin, North Carolina, Oklahoma, Maryland, Massachusetts, the District of Columbia, Michigan, Delaware, Georgia, Hawaii, Illinois, New Hampshire, New Jersey, and Minnesota. 

Novartis allegedly paid remuneration in the shape of cash, expensive dinners, alcohol, travel, event tickets, and speaker fees, to doctors who attended or spoke at events designed to promote the company's drugs Lotrel, Valturna, Starlix, Tekamlo, Diovan HCT, Tekturna HCT, and Exforge HCT. The doctors later prescribed the drugs, which were often reimbursed by Medicare, Medicaid, the VA, and TRICARE. The alleged kickbacks tainted these transactions, constituting violations of the Anti-kickback Statute and the False Claims Act. 

"For more than a decade," the acting U.S. attorney for southern New York explained, "Novartis spent hundreds of millions of dollars on so-called speaker programs, including speaking fees, exorbitant meals, and top-shelf alcohol that were nothing more than bribes to get doctors across the country to prescribe Novartis's drugs."

Novartis sales reps allegedly conducted roundtables and speaker programs at some of the country’s most expensive restaurants. In California, doctors were invited to dine at San Francisco's Gary Danko and LA's Patina and Matsuhisa. Events were also held at upscale New York City restaurants like Masa, Il Mulino, Peter Luger, and Le Bernardin.  

According to Novartis' internal records, between January 2002 and November 2011, the company held over 12,000 'speaker programs,' spending hundreds of dollars per attendee on food and drink. For example, the complaint mentioned a $680-per- person dinner event held at a famous restaurant in Houston, Texas. 

The False Claims Act lawsuit against Novartis also mentioned an internal presentation by Novartis executives, which stated that the “reasons for excessive costs per person” were that events were planned at "very exclusive places" with "expensive menu choices," and "no control over alcohol spending.” 

In other internal communications cited in Bilotta's lawsuit, Novartis executives said they planned to “establish Novartis CV [cardiovascular] franchise as the 800-pound gorilla”  by spending as much as $105 million on speaker programs/roundtables per year.  

Whistleblower Oswald Bilotta is a former Novartis sales representative. He worked closely with the FBI during the fraud investigation, sometimes wearing a wire to record Novartis employees acknowledging the existence of the alleged scheme. Bilotta has commented that he was motivated by a desire to "turn the system upside down and make it more legit. . .  fair for taxpayers and good for patients." According to some estimates, he will likely receive a whistleblower award surpassing $70 million.

Pharma and healthcare insiders with information about fraud can sue wrongdoers under the False Claims Act. If their case is successful, whistleblowers can receive up to 30 percent of any taxpayer fund recoveries.

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David Kani & Steve Hochfelsen are represented by Elite Lawyer Management, managing agents for America's best attorneys.