Accidental court filing reveals Novartis' kickback settlement talks: report

Novartis
An accidentally filed court document showed Novartis could settle a federal kickback suit soon, Bloomberg reported. (Novartis)

After six years of legal wrangling and unflattering headlines, Novartis appears close to putting a doctor kickback lawsuit behind it—and the revelation came from a court filing that was supposed to be kept secret.

The whistleblower suit against Novartis, joined by the U.S. Department of Justice (DOJ) in 2013, claimed the drugmaker used sham educational events as cover for kickbacks to doctors.

In exchange for fancy dinners, fishing trips and other entertainment, Novartis was basically buying prescriptions for its cardiovascular meds Lotrel and Valturna and diabetes drug Starlix, the suit claims. The company reportedly has been negotiating a settlement worth up to $1 billion, which would rank it among the biggest-ever marketing settlements in pharma.

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Tuesday, a letter filed in the court’s docket and then quickly removed said the two sides had made “significant progress” toward a settlement, Bloomberg reported. U.S. Attorney Geoffrey Berman intended for the letter to stay confidential as the talks are ongoing, but it was mistakenly posted publicly for a short time, the news service noted.

The letter showed a settlement proposal has been submitted to the DOJ for expedited approval. Berman said the settlement will be “substantially complete” by June 18, and the parties have until Aug. 18 to finalize it.

In a statement sent to FiercePharma, a Novartis spokesperson confirmed it's “engaged in settlement discussions with the Southern District of NY to resolve the ongoing Speaker Program litigation” but declined to comment further.

As part of the deal, the Swiss pharma is also working with the inspector general of the Department of Health and Human Services on stepping up its internal compliance processes and ethics training. Novartis will “implement a specified set of compliance obligations including the establishment of a compliance officer and compliance infrastructure, training, a risk assessment program, and outside monitoring by an independent review organization,” according to the letter cited by Bloomberg.

RELATED: Novartis could settle for $1B as part of federal kickback lawsuit: report

But Novartis is already revamping its compliance amid a series of scandals—and as one of CEO Vas Narasimhan’s top priorities of rebuilding trust with society. Some of its recent missteps include the now-notorious $1.2 million in payments to President Donald Trump’s former personal lawyer Michael Cohen.

The company has also faced bribery allegations in several countries, including South Korea. And in 2015, the company disgorged $370 million to settle U.S. government accusations that it paid kickbacks to specialty pharmacies in return for recommending two of its drugs. Such settlements typically include the sort of corporate integrity agreement that would be part of Novartis' new deal with the DOJ.

Spearheading the internal overhaul is Novartis' newly installed Chief Ethics, Risk and Compliance Officer Klaus Moosmayer, who joined the drugmaker from a top ethics job at Siemens.

Novartis recruited Moosmayer after promoting its former top ethics supervisor, Shannon Thyme Klinger, to general counsel—a position that opened up when ex-general counsel Felix Ehrat resigned for co-signing the Cohen deal with former CEO Joe Jimenez.

The exact size of the settlement in the current suit is not yet clear, but Stat reported a month ago that Novartis may be inching close to a settlement worth $1 billion. The government is seeking damages of three times what public health insurance programs Medicare and Medicaid were allegedly billed for scripts from doctors Novartis had bribed.

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