In October, the Sanofi ($SNY) board fired CEO Chris Viehbacher because of what it termed poor communication, including being blindsided by a growing weakness in sales of diabetes meds in the U.S. Now, a whistleblower lawsuit claims that part of Viehbacher's undoing was tied to a massive kickback scheme directed through consultants that was used to juice sales of diabetes meds in the States.Former Sanofi CEO Chris Viehbacher
The suit is being brought by Diane Ponte, a former paralegal in the contracts department who claims she was forced out of Sanofi after 13 years when she brought her suspicions to the attention of supervisors, CNBC reports. She claims Sanofi funneled tens of millions of dollars to pharmacy groups and hospitals through consultants Accenture and Deloitte using contracts that appeared to be legitimate but which were in fact inducements. The consulting firms are not named in the suit, CNBC said. The suit also alleges that about $1 billion is "unaccounted for" at the company.
The lawsuit, filed in New Jersey Superior Court in Newark, names Sanofi, Viehbacher and several other top executives, CNBC reports.
"Diane Ponte is a disgruntled former employee who is opportunistically attacking our company," Sanofi said in a statement emailed Thursday. "Ponte filed for violations of New Jersey state employment law, specifically the New Jersey Conscientious Employee Protection Act ('CEPA'). The employment law allegations are without merit, and Sanofi will vigorously defend the suit. We take this matter very seriously and will protect our company and our reputation."
In the company's Q3 earnings call, shortly before being fired, Viehbacher disclosed weakness in the company's diabetes franchise in the U.S. After his departure, the company disclosed that sales of its diabetes drugs, which includes the $7 billion behemoth Lantus, would be flat for 2015.
Just two years ago, the French drugmaker paid $109 million to settle U.S. Justice Department allegations that it had provided free syringes of its arthritis injection Hyalgan to doctors to get them to prescribe the medication. The suit said the doctors then charged payers the regular rate for the doses they received at no cost. Giving meds away can be considered an inducement to prescribe and then charge federal programs for drugs that might not otherwise have been prescribed.
When it settled with U.S. authorities, Sanofi said it had discontinued the program in 2009. That was shortly after Viehbacher became CEO at Sanofi. The company also said it was setting up a corporate integrity program to prevent that kind of thing from happening again.
Allegations of creative kickback schemes are not new to the industry. In July, a whistleblower claimed she was fired from Novartis ($NVS) for suggesting a $400,000 research grant to McKesson ($MCK) was being used to push the sale of its cancer drug Afinitor. And in September, GlaxoSmithKline ($GSK) agreed to pay $500 million in China to settle the ongoing criminal investigation tied to paying doctors and hospitals there bribes to buy more drugs.
- here's the CNBC story
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Editor's Note: The story was updated to include a comment from Sanofi.