Novartis has faced years of investigations into bribes paid to doctors in Greece, and this week, the company inked a $347 million deal with U.S. authorities to put the issue and others to rest. In a new deferred prosecution agreement, the DOJ lays out details behind the scheme and the company's efforts to conceal its illicit payments.
From 2012 to 2015, Novartis paid doctors to attend medical congresses in Greece and internationally, with per-doctor expenses sometimes exceeding $6,000 per trip, the document says. Novartis paid for airfare, hotels, and congress registration fees, and the company’s policies stated the trips were to provide medical information.
In reality, the trips were designed to “improperly influence” the Greek doctors to prescribe wet age-related macular degeneration drug Lucentis, the DPA says.
At the time, Lucentis was “facing real difficulties in the market,” according to minutes from a September 2012 meeting of the Lucentis team obtained by the DOJ. Sales reps were instructed to “make clear” to doctors there would be “serious consequences” for sales declines.
Doctors “must understand that their participation in [specific congresses in the United States and Europe] will be canceled if sales performance is not improved significantly."
“No presents anymore,” the minutes said.
As part of the years-long scheme, Novartis kept records of doctors with the highest likelihood to prescribe Lucentis, and those doctors received additional “investments." The company reduced spending on others, the DPA says.
As a result of doctor-payment scheme, Novartis reaped at least $71 million in profits, the DOJ says.
Even as Novartis ran the program, it also “falsely recorded the corrupt payments associated with congress sponsorships as legitimate advertising and promotion expenses,” the DPA says. Those false records were submitted with Novartis’ annual financial reporting to the SEC. The drugmaker this week agreed to pay the SEC disgorgement of $92.3 million and prejudgment of $20.5 million for reporting violations.
Aside from paying for doctors to attend conferences, federal authorities also zeroed in on a Greek postmarketing trial of Novartis' hypertension medicines. Doctors were paid for their participation, and many were under the impression they should prescribe the company’s medicines in exchange for that payment, according to a trial debrief between employees described in the DPA.
The study was conducted as a “marketing project,” one brand manager said during the debrief. “That’s within quotation marks. Between us.”
Novartis on Thursday entered a $347 million deal with the DOJ and SEC related to those schemes and others in Vietnam, South Korea and China. The deal followed years of investigations and negative headlines for the drugmaker over scandals in multiple countries. Meanwhile, the company is also navigating a kickbacks probe in the U.S., and it last year set aside $700 million to resolve that case.
Under CEO Vas Narasimhan, Novartis has pledged to improve its standing in and trust with society. Among changes it’s implemented are adopting “principles-based” compliance policies and a “speak-up culture.”