Novartis Pharmaceuticals has agreed to pay $390 million to settle charges made by the United States government that the drug maker provided kickbacks to specialty pharmacies to push its products on patients.
The agreement between the U.S. branch of Novartis AG, the U.S. government and around 40 states involves payments made by the drug company from 2007 to 2012 to certain pharmacies to convince them to recommend Novartis drugs to Medicare and Medicaid patients.
The federal case brought by Manhattan U.S. Attorney Preet Bharara centered on six drugs manufactured by Novartis, including Exjade, which is used to lower the overload of iron in blood transfusions patients.
According to the settlement, Novartis admitted to facts that detailed its relationship with certain specialty pharmacies as well as how the alleged scheme was operated.
The Swiss drug maker said that it is already implementing new measures to help improve its partnership with drugstores, adding that it remains committed to following the standards of proper business conduct.
Specialty pharmacies typically cater to patients suffering from serious health conditions such as organ transplants, HIV/AIDs, or cancer. These drugstores have earned a reputation for dispensing drugs that were more expensive and involved special handling.
However, the sector has come under fire from critics in recent months following the split between drug maker Valeant Pharmaceuticals and specialty pharmacy Philidor over concerns about the drugstore's business relationship with Valeant and its billing practices.
Novartis Case
The suit against Novartis stemmed from a complaint made by former sales manager David Kester under the False Claims Act.
Prosecutors said the Swiss drug maker chose specific specialty pharmacies for its closed distribution network known as EPASS, which was required to fill prescriptions.
These drugstores were then enticed to convince their customers to continue their use of Novartis medications. They were also asked to downplay the risks and side effects associated with the drugs.
The drug maker was also said to have run a contest involving the specialty pharmacies and maintained "score cards" that showed which of them were able to keep their customers on specific medications for the longest period.
"I believe many of my customers, who were the physicians and nurses treating patients with life-threatening diseases, did not fully understand the relationships between the specialty pharmacies and Novartis," Kester said.
BioScrip Inc. and Accredo Health Group Inc., two specialty pharmacies included in the case, had already entered a settlement with the U.S. government and jointly paid $75 million.