Six former and current Novartis (NVS) executives at its Korean unit were indicted Monday on charges of paying more than $2 million to doctors in return for prescribing its medicines, a company spokesman confirmed. Among those indicted was the former chief executive in the country.
At the same time, six publishers of medical publications and 15 doctors who work at general hospitals were also indicted. The drug maker funded academic events that were supposedly organized by the publications, but distributed to doctors money disguised as attendance fees and for articles that the doctors contributed to the publications, the Korea Herald reported.
These activities occurred from January 2011 through earlier this year, according to the Seoul Western District Prosecutors’ Office, which raided Novartis’s offices six months ago in search of evidence that the drug maker had paid bribes. Moon Hak-sun,the first Korean chief executive at the unit, had been suspended from all his duties since April.
A Novartis spokesman wrote us that “we have acknowledged and regret that certain associates in Korea conducted small medical meetings and other scientific related activities through trade journals … We have also acknowledged that some associates supported travel to overseas congresses for some health care practitioners in a way that did not fully comply” with industry standards.
The company, he continued, “does not tolerate misconduct” and is implementing a remediation plan based on the findings of an internal investigation. However, he added that “we reject the implication that the alleged conduct was sanctioned by the most senior management of Novartis Korea. This indictment pertains to actions taken by certain associates in Korea which are inconsistent with and not reflective of Novartis’s policies and culture.”
This is hardly an isolated incident, though. In fact, drug makers continue to be regularly scrutinized for paying what amounts to kickbacks to physicians and health officials to boost prescriptions for their medicines and Novartis has figured prominently in recent months.
Last March, the company agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act by making illegal payments to health care providers in China. Novartis employees at two different Chinese subsidiaries gave money, gifts, vacations, and entertainment, among other things, to health care professionals between 2009 and 2011, according to US authorities.
That same month, an anonymous whistleblower accused Novartis of paying bribes in Turkey by using a consulting firm to boost the use of its medicines. The alleged bribes reportedly resulted in $85 million in benefits to the company. The firm aided the drug maker by getting medicines added to formularies, or list of treatments that were approved for use in government-run hospitals. The Novartis spokesman said an internal probe found that the allegations were unsubstantiated, but the company is working with the authorities.
In the United States, Novartis faces a trial later this year over allegations that the company violated federal anti-kickback laws and ran tens of thousands of “sham” events used to encourage doctors to prescribe several medicines. Last year, the drug maker paid a $390 million settlement over charges of inducing specialty pharmacies to boost prescriptions. Both cases stemmed from whistleblower lawsuits.
Over the past few years, several drug makers were enmeshed in bribery scandals. The most notorious example involved GlaxoSmithKline (GSK), which, three years ago, was found guilty by a Chinese court of bribing doctors, hospitals, and other nongovernment personnel, and was fined more than $490 million. Since then, Glaxo has begun probing bribery allegations in several other countries.
Recently, Bristol-Myers Squibb ended payments to doctors in China shortly after agreeing to pay more than $14 million to resolve charges that it violated the Foreign Corrupt Practices Act by making illegal payments to health care providers in the country. In recent years, SciClone Pharmaceuticals, Eli Lilly, and Johnson & Johnson (JNJ) also agreed to settlements for violating the same federal law.