Novartis faces more kickback scrutiny after $45M Express Scripts settlement

Novartis ($NVS) is in the hot seat again over kickback allegations. An Express Scripts ($ESRX) unit agreed to settle claims with the U.S. Department of Justice that it participated in a scheme with the company that ended in improper government reimbursements. And if the DOJ has its way, info from the settlement could lend weight to a kickback case pending against Novartis.

Express Scripts' Accredo Health Group agreed to pay $45 million to resolve allegations with the Justice Department, which claimed Novartis illegally offered patient referrals to Accredo from 2008 to 2012 in return for recommending patient refills of blood transfusion med Exjade, Reuters reports. The scheme violated the False Claims Act and the Anti-Kickback Statute, boosting sales of the drug and causing the government to overpay for reimbursements, the DOJ alleges.

For Express Scripts, the settlement represents "the best possible solution" to the problem, but Novartis said it will continue to fight the allegations and defend itself in court, according to the Reuters story.

U.S. Attorney Preet Bharara

Meanwhile, U.S. Attorney Preet Bharara hopes to use information from the Accredo settlement to expand the case against Novartis, a company he labeled last year as a "repeat offender." The government in 2013 slapped Novartis with a lawsuit which accused the company of getting 20 pharmacies to switch thousands of patients from 2005 to 2013 to immunosuppressant Myfortic in exchange for discounts and rebates. The suit also claims that from 2007 to 2012, Novartis provided patient referrals and rebates to specialty pharmacy BioScrip ($BIOS) to sway patients to order refills of Exjade. BioScrip settled claims last year for $11.7 million.

"(U)sing the lure of kickbacks disguised as rebates, Novartis co-opted the independence of certain pharmacists and turned them into salespeople for one of its drugs," Bharara said at the time. "By allegedly hiding this illegal quid pro quo … Novartis caused the public to pay tens of millions of dollars for kickback-tainted drugs."

This is not the first time the company has found itself in deep water over kickback allegations. In 2010, Novartis paid $422 million in fines and civil penalties to settle claims that it offered kickbacks to doctors to increase prescriptions of its blood pressure drugs Diovan, Exforge and Tekturna. The settlement stipulated a 5-year "corporate integrity pact" that was meant to steer Novartis clear of more wrongdoing.

But the company still faces legal pushback from whistleblowers, who took Novartis to task over its questionable marketing practices. David Kester, a former Novartis respiratory account manager is pursuing claims against Novartis and other companies regarding drugs. And last July Min Amy Guo, the former executive director of Novartis' Health Economics and Outcomes Research Group, launched a whistleblower suit against the company. Guo claimed she was fired after pointing to conflicts of interest in the way Novartis planned to award a contract to health services company McKesson ($MCK) for cancer drug Afinitor.

- read the Reuters story

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