Hooters and Fishing Trips for Docs – Has Novartis Violated Corporate Integrity Agreement?

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Hooters and Fishing Trips for Docs – Has Novartis Violated Corporate Integrity Agreement?

April 29th, 2013 // 12:40 pm @

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The last week has not been a good one for Novartis. Now federal authorities have filed another lawsuit that charges Novartis with giving kickbacks to increase the issuance of prescriptions. This allegedly caused Medicare and Medicaid to pay for drugs based upon false claims. This current complaint has both damages and civil penalties for the corruption of the drug dispensing process with incentive programs running into the millions of dollars for doctors.

This is a separate case from the one we reported on last week. In that case Novartis allegedly gave discounts to 20 pharmacies so that they would switch patients to its Myfortic drug.

In the case this week, the government alleges that from 2001 to 2011, Novartis broke the anti-kickback statute and its own company policies regarding speaker programs. These mandate that the programs must have an educational purpose and that slides about the company’s drugs have to be shown.

Instead of that, Novartis was apparently paying doctors to talk about various drugs, such as Lotrel and Valturna. This occurred at events that were simply social meetings for these physicians.

A statement from the US Attorney in New York noted that the payments and fancy dinners that the doctors were given were really kickbacks to speakers and guests to encourage them to write Novartis prescriptions. Novartis apparently gave payments to doctors for speaker events that never occurred or had almost no attendees. Thousands of these were held all over the US and few if any slides were shown. The doctors also did not spend much time at all discussing the drug.

Many of the programs were held in a place where it is impossible for a presentation to occur, such as on a fishing trip in Florida. Other events were actually held at Hooters restaurants.

The complaint from the DA also claimed that Novartis gave doctors pricey dinners that they had at very expensive restaurants. For instance, for a July dinner for three that included the speaker in Washington DC, $2015 dollars were spent, which is over $670 per person. Novartis also paid this speaker $1000 to speak at the program. Another program on Valentine’s Day in 2007 had a total cost of $3100 for two people.

Regarding the corporate integrity agreement, three years ago the firm signed such a document that lasts five years. The drugmaker promised to not do any such practices as have been alleged in the last week. The alleged kickbacks appear to have happened before and also after this agreement was signed. This could mean that Novartis could face exclusion from having a contract with several healthcare programs on the federal level. This could be a massive financial penalty.

At this time, Novartis has issued statements that they will defend themselves from the above allegations. They argue that discounts/rebates are common and legal, and that the Myfortic suit is a big expansion of the anti-kickback law.

This could be, but it seems to us that Novartis is facing a tough battle in court. This is especially true if the DOJ decides to make an example out of the drug giant. Exclusion is very expensive and is thus a very serious penalty. It has not yet been attempted against a big pharma company. But the feds did exclude three execs at Purdue Pharma for misbranding OxyContin. Is it possible that Novartis could face a similar fate?

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