Novartis, still embroiled in Greek probe, faces kickback allegation in China—again

Novartis headquarters
A self-proclaimed former employee at Novartis’ Beijing office accused the Swiss drugmaker of expensing fake academic events to offer kickbacks to doctors. (Wikimedia Commons/Andrew/Flickr)

As Novartis fights allegations that it bribed Greek government officials in exchange for increased use of its drugs, the company faces new accusations of bribery in China.

A whistleblower who claimed to be a recent employee at Novartis’ Beijing office accused the Swiss drugmaker of expensing fake academic events to offer kickbacks to doctors. Self-identified by the name Zhang Han (along with a national ID number), the purported sales rep detailed the allegations in an open letter posted on Zhihu, China’s Quora-like platform.

The original letter has already been deleted, but FiercePharma obtained several copies circulating online. In the letter, Zhang said (s)he was speaking up because (s)he had been unfairly treated at the company since she joined its staff in January.

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According to the letter, Zhang was asked to act as a doctor at fake conferences, where Novartis employees would buy receipts from the venue and submit them as company expenses. Those expense reimbursements were then used to offer kickbacks to doctors for increasing prescriptions of drugs such as Diovan and Exforge. A doctor could collect 1 ($0.16) to 2 Chinese yuan for every box of Diovan or Exforge prescribed and 20-40 Chinese yuan for each new patient signed up, the letter stated.

Novartis’ Chinese unit immediately responded Monday in a statement (Chinese) posted on its official account on WeChat, a popular social media platform in China. The company has started an internal investigation, and “if any wrongdoing or violation of the laws and regulations or Novartis values is found, the company will take serious actions without hesitation," the statement said.

RELATED: Greek prosecutor ratchets up inquiries in Novartis bribery probe: report

The accusations are still unsubstantiated and no government agency addressed by the open letter has come forward with an investigation.

It's not the first time Novartis has faced similar bribery allegations. Previously, an SEC investigation found the company’s Chinese subsidiaries had recorded legitimate payments for travel, conferences, lecture fees, and so on, which were instead spent on different forms of bribes to doctors to boost sales of Novartis products. Novartis didn’t admit any wrongdoing but agreed to pay $25 million to settle the charges in March 2016. The company said at the time that the issues “pre-date many of the compliance-related measures introduced by Novartis across its global organization in recent years.”

The timing, however, couldn’t be worse. Novartis is entangled in a high-profile bribery probe in Greece, which involves allegations that it paid top Greek government officials bribes in the millions of euros in exchange for fixing drug prices and other favors.

It also came just days after newly minted CEO Vas Varasimhan laid out his Chinese ambitions with Bloomberg while attending the China Development Forum in Beijing. Citing recent favorable regulatory changes, Varasimhan said he aims to more than double sales in China over the next five years. Novartis hopes to bring new drugs to the market more quickly, he said, and is including China in all late-stage trials, hoping to take advantage of new rules allowing data from multicenter trials to flow directly into new drug applications.

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