Justice News

Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Thursday, September 30, 2010
Novartis Pharmaceuticals Corp. to Pay More Than $420 Million to Resolve Off-label Promotion and Kickback Allegations

WASHINGTON – Novartis Pharmaceuticals Corporation has agreed to pay $422.5 million to resolve criminal and civil liability arising from the illegal marketing of certain pharmaceutical products, the Justice Department announced today.

According to the agreement reached with the government, the East Hanover, N.J.-based company will plead guilty to a misdemeanor and pay a $185 million combined criminal fine and forfeiture for the off-label promotion of Trileptal in violation of the Food, Drug and Cosmetic Act. The Food and Drug Administration (FDA) approved Trileptal as an anti-epileptic drug, for the treatment of partial seizures, but not for any psychiatric, pain or other uses. Once a pharmaceutical is approved by the FDA, a manufacturer may not market or promote it for any use not specified in its new drug application. The unauthorized uses are also known as "unapproved" or "off-label" uses.

In addition to the criminal fine and forfeiture, Novartis has agreed to pay $237.5 million to resolve civil allegations under the False Claims Act that the company unlawfully marketed Trileptal and five other drugs, and thereby caused false claims to be submitted to government health care programs. Specifically, the civil settlement resolves allegations that Novartis illegally promoted Trileptal for a variety of uses, including psychiatric and pain uses, which were not medically accepted indications and therefore not covered by those programs. In addition, the agreement resolves allegations that the company paid kickbacks to health care professionals to induce them to prescribe Trileptal and five other drugs, Diovan, Zelnorm, Sandostatin, Exforge and Tekturna. The federal share of the civil settlement is $149,241,306, and the state Medicaid share of the civil settlement is $88,258,694.

"This resolution demonstrates the Department of Justice’s ongoing dedication to taking action against pharmaceutical fraud in all its forms," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "Unlawful off-label promotion and providing illegal inducements to health care professionals undermine the integrity of our health care system and we will continue to pursue these types of violations."

"Off-label marketing can undermine the doctor-patient relationship and adversely influence the clear judgment that a doctor’s patients have come to rely on and trust," said Zane D. Memeger, U.S. Attorney for the Eastern District of Pennsylvania. "Pharmaceutical companies have a legal obligation to promote the drugs they manufacture only for uses that the Food and Drug Administration has deemed are safe and effective. That legal obligation takes priority over a company’s bottom line. This prosecution demonstrates our continuing commitment to ensure that pharmaceutical companies comply with the law."

The civil settlement resolves four lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. The four cases are: U.S. ex rel. Austin v. Novartis Pharmaceuticals Corporation; U.S. ex rel. McKee v. Novartis Pharmaceuticals Corporation; U.S. ex rel. Copeland v. Novartis Pharmaceuticals Corporation; and U.S. ex rel. Garrity v. Novartis Pharmaceuticals Corporation. As part of today’s resolution, the whistleblowers, all former employees of Novartis, will receive payments totaling more than $25 million from the federal share of the civil recovery.

"This settlement represents a landmark victory in our district’s continuing battle against health care fraud. We intend to bring to justice any pharmaceutical company that attempts to cloud physicians’ medical judgment through kickback practices and illegal promotional activities," said A. Brian Albritton, U.S. Attorney for the Middle District of Florida.

Novartis also signed a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). The company is subject to exclusion from Federal health care programs, including Medicare and Medicaid, for a material breach of this CIA and subject to monetary penalties for less significant breaches. Among other things, the CIA requires the board of directors (or a committee of the board) to annually review the company’s compliance program with the help of an outside expert and certify its effectiveness; that certain senior executives annually certify that their departments or functional areas are compliant; that Novartis send doctors a letter notifying them about the settlement; and that the company posts on its website information about payments to doctors, such as honoraria, travel or lodging. The five-year agreement further requires the implementation of a compliance program addressing promotional activities.

"OIG will carefully monitor the Corporate Integrity Agreement to ensure that Novartis is more transparent in its business transactions, that its Board of Directors is held more accountable, and that the names of physicians receiving payments are publicly disclosed," said Department of Health and Human Services Inspector General Daniel R. Levinson. "The result will be stronger protections for patients and the nation's taxpayers."

The U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Justice Department’s Office of Consumer Litigation prosecuted the criminal case. The Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Pennsylvania, and the U.S. Attorney’s Office for the Middle District of Florida handled the civil lawsuit, with assistance from the National Association of Medicaid Fraud Control Units and the offices of various state attorneys general.

This settlement is part of the government’s emphasis on combating health care fraud and another step for the HEAT initiative, which was announced by Attorney General Eric Holder and HHS Secretary Kathleen Sebelius in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $3.445 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $4.595 billion.  

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