Novartis and the US Department of Justice are squabbling over documents that allegedly contain details of nearly 80,000 “sham” events that the drug maker used to encourage doctors to prescribe several blood pressure medicines, according to documents filed late last week in federal court in New York.
The tussle comes as part of a run-up to a planned trial this summer in which the feds plan to argue that Novartis (NVS) violated federal antikickback laws for nearly a decade. Last November, the feds sought the documents, but the drug maker has maintained the government is unfairly expanding the scope of its inquiry and that the request is “extraordinarily burdensome,” according to court documents. The drug maker wants a protective order.
The trial is an outgrowth of a whistleblower lawsuit filed five years ago by Oswald Bilotta, a former Novartis sales rep, and was joined by the Justice Department in 2013. The feds, in fact, joined two separate lawsuits at the time that alleged Novartis paid bribes to boost prescriptions of its medicines, and, as a result, caused federal health care programs to overpay for medicines.
The cases gained considerable attention because US Attorney Preet Bharara, who is based in New York, claimed Novartis is a repeat offender when he announced the government had joined the lawsuits.
Here’s the back story: In an earlier case resolved in 2010, the company paid $422.5 million in penalties and pleaded guilty to a misdemeanor for improperly promoting several drugs. Novartis also signed a five-year corporate integrity agreement, which required establishing an internal compliance program and reporting violations. For these reasons, Bharara’s choice of words suggested the drug maker may face a much stiffer punishment in the two more recent cases.
Last fall, Novartis agreed to settle one of those two cases that the feds joined in 2013. In that other case, the feds alleged the company induced specialty pharmacies to boost prescriptions. The drug maker paid a $390 million settlement, which was much less than the $3.35 billion in damages and civil fines the Justice Department sought initially. The agreement also placed greater responsibility on Novartis executives to avoid similar infractions, although the company was not barred from dealing with federal health care programs.
As a result, Novartis may settle the Bilotta case, according to Patrick Burns, who heads Taxpayers Against Fraud, a nonprofit that advocates for tough penalties and is partially funded by attorneys. “It’s hard to know, but the facts here are pretty simple,” said Burns. “The conduct is pretty outrageous and discovery is going to be brutal. Novartis’s legal team is incentivized to fight, but it’s hard to see how that squares with shareholder’s interest.”
As for Novartis, a spokesman sent us this note: Novartis “disagrees with the way the government has characterized its conduct in these matters and continues to dispute the government’s allegations. Novartis is committed to ensuring that physicians and patients have the information they need to make informed health care decisions and believes speaker programs can help educate other health care providers about the appropriate use of medicines, so they can make informed prescribing decisions, which in turn enhances patient care.”
In any event, the feds appear intent on pressuring the drug maker.
In a document filed last week, the feds wrote that “this case implicates issues of enormous public concern: whether Novartis defrauded federal health care programs of hundreds of millions of dollars by systematically providing inducements to doctors across the country, for a decade, in an effort to influence the drugs they prescribed to patients in their care.”
The Bilotta case, by the way, is chock-full of details that underscore why the feds are concerned with speaker programs. According to court documents, from 2002 to 2011, Novartis made payments and sponsored “lavish” dinners for doctors to discuss several high blood pressure drugs, but that these events were purportedly kickbacks to the speakers and attendees to induce them to prescribe the medicines.
Moreover, the feds argued some programs had “little to no educational value.” Why? Either the events never actually occurred, or doctors never spoke about the drug at issue. Just the same, the feds alleged payments were made in the form of honoraria as if speaking sessions did take place. Some presentations were made on fishing trips off the Florida coast or at a Hooters restaurant.
The drugmaker often treated doctors to expensive dinners at high-end restaurants, according to the documents. In one instance, a dinner for three, including the speaker, at a Washington, D.C., restaurant cost $2,016, or $672 per person. At another event held on Valentine’s Day in 2006, Novartis paid $3,127 for a meal for two at a West Des Moines, Iowa restaurant.
During the 10-year span, Novartis spent more than $65 million and ran more than 38,000 speaker programs for three of its blood pressure drugs. Speakers were paid an average of between $750 and $1,500, although some received $3,000 per program, according to the court documents. The feds also allege that Novartis had few checks on whether sales reps accurately reported attendance.