Novartis can't convince judge to free it from kickbacks case

Novartis ($NVS) has failed again to convince a federal judge to boot a Department of Justice kickbacks case against it that claims the Swiss drugmaker showered pharmacies with discounts and rebates to boost sales of two drugs.

U.S. District Judge Colleen McMahon of New York in May said the case would progress but gave Novartis one last chance to make a compelling argument that the government's civil litigation attempt fell short of the legal requirements. But according to Reuters, Judge McMahon on Thursday rejected Novartis' arguments that the DOJ's case was based on a "potentially limitless" theory that any claims submitted by pharmacists who got the special benefits from Novartis could be included. It said the DOJ should have to prove that the alleged scheme was the actual motivator for pharmacists to sell the drugs involved.

The suit, which grew out of a whistleblower claim, is tied to sales of Myfortic, a transplant drug, and Exjade, used to reduce excess iron in patients receiving blood transfusions. It alleges that between 2005 and 2013, Novartis gave discounts and rebates to up to 20 pharmacies to get them to switch kidney transplant patients to Myfortic. It also claims that from 2007 to 2012, Novartis provided patient referrals and rebates to specialty pharmacy BioScrip ($BIOS) so that it would pressure patients to order refills of Exjade. BioScrip settled for $11.7 million in January.

Novartis has denied the charges, pointing out that, "The use of specialty pharmacies to support patients with complex medical conditions is an effective, well-established practice to help ensure patients comply with their physician-directed treatment plans," a spokeswoman has said.

But according to Reuters, Judge McMahon Thursday ruled that when "a party falsely certifies compliance with the (anti-kickback law) in connection with a claim, the claim is 'false' as a matter of law, and so is not eligible for reimbursement." She said there is no indication that Congress intended to put any limits on which claims could be included.

And as the government has pointed out in the case, Novartis has been down this path before. In April, U.S. Attorney Preet Bharara labeled Novartis a "repeat offender," pointing to the $422 million in fines and civil penalties it paid in 2010 to settle allegations that it offered kickbacks to doctors to increase prescriptions of its blood pressure drugs Diovan, Exforge and Tekturna. The settlement included a 5-year "corporate integrity" pact that should have guided Novartis away from the program.

- read the Reuters story