It was seven years ago when federal prosecutors first targeted Novartis in two investigations over alleged kickbacks to doctors and Medicare-related charity donation fraud. Now, the Swiss drugmaker can finally put those charges behind it—by paying hundreds of millions of dollars.
Novartis agreed to pay $729 million to settle allegations that it offered kickbacks to doctors and illegal copayment support to Medicare patients to boost its drugs’ sales. The dollar amount matches what the company last year said it had set aside for potential settlement.
In a statement on Thursday, Novartis CEO Vas Narasimhan labeled the settlements as “an important milestone on our journey to build trust with society,” stressing that it’s a different company now “with new leadership, a stronger culture, and a more comprehensive commitment to ethics embedded at the heart of our company.”
The kickbacks agreements follow a $347 million foreign bribery payout last month and a $195 million price-fixing settlement earlier this year, bringing the total to almost $1.3 billion.
The latest settlements cover two different cases. In the first, federal prosecutors claim Novartis used “tens of thousands of” speaker programs and events—some entailing exorbitant meals—as disguise to provide bribes to doctors. The goal, according to prosecutors, was to encourage doctors to prescribe its drugs, including Lotrel, Valturna, Starlix, Tekturna, Tekamlo, Diovan and Exforge.
For that whistleblower case, Novartis will pay $591.4 million to the U.S. government, forfeit $38.4 million and shell out an additional $48.2 million to resolve state Medicaid claims.
Plus, the company has agreed with the HHS’ Office of Inspector General to cut back on future speaker programs, including lowering the maximum money it may spend on such events, the U.S. Department of Justice said.
According to Novartis, it’s transitioning its medical education in the U.S. predominantly to digital formats, “significantly limiting” the number of doctors and healthcare providers it pays to deliver education, and eliminating the use of restaurants as venues.
To wrap up the second case, Novartis will pay $51.25 million to resolve charges that it funneled money through charities to cover copayments of Medicare patients so that they would use its multiple sclerosis med Gilenya or cancer drug Afinitor.
Novartis has faced myriad allegations of unethical or illegal behavior over the years. Last week, it agreed to pay $347 million to end probes into its overseas sales conduct under the U.S. Foreign Corrupt Practices Act. The company admitted to bribing doctors in several countries to increase prescriptions for its meds.
In March, the Swiss pharma agreed to pay $195 million to settle federal claims it participated in an industrywide generic price-fixing scheme.
Back in 2017, South Korea fined Novartis $50 million and temporarily suspended reimbursement of Exelon and Zometa, accusing the company of using medical journals to offer kickbacks to doctors. A scandal alleging Novartis paid Greek government officials to earn favorable pricing status also dragged on for years. And the 2018 revelation of a $1.2 million payment to President Trump's former lawyer Michael Cohen served as a watershed moment that prompted Narasimhan to launch an ethics and compliance shakeup.