Justice Department hits Novartis with another round of kickback accusations

The Department of Justice has added another set of kickback allegations to its lawsuit against Novartis ($NVS). In April, the feds accused the Swiss drugmaker of using pharmacy kickbacks to increase sales of its transplant drug Myfortic. Now, the alleged pharmacy kickbacks involve a different drug--the iron chelation therapy Exjade.

According to federal prosecutors, Novartis set up a specialty pharmacy network to dispense Exjade, used to control iron levels of patients who have received blood transfusions. One of those pharmacies, BioScrip ($BIOS), says it pushed patients to get Exjade refills in return for more patient referrals and higher rebates.

BioScrip has already settled its side of the story, with a $15 million payment--and a series of admissions about its relationship with Novartis, which presumably will help prosecutors build their case against the company.

According to the amended lawsuit, Novartis persuaded BioScrip employees to call patients who had not refilled their prescriptions, and the pharmacy got credit for every "restart." When refills weren't forthcoming, BioScrip lost patient referrals; when the pharmacy revved up its refill rate, the patient referrals bounced back, the DoJ claims. 

"Novartis is caught having orchestrated yet another scheme whereby it used the lure of kickbacks to co-opt a healthcare providers' independence and, in this case, turned pharmacy employees at BioScrip into salespeople for Exjade," U.S. Attorney Preet Bharara said in a statement.

When Bharara announced the original lawsuit over Myfortic, he pointed out that Novartis had settled marketing allegations before. Whether that fact will play into settlement talks this time around remains to be seen, but the Justice Department did cite Pfizer's ($PFE) previous marketing misbehavior when it slapped the company with a record-setting criminal fine in its Bextra-related settlement.

- read the DoJ statement
- see the amended complaint (PDF)

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