Swiss drugmaker Novartis must face doctor kickback suit, U.S. judge rules

NEW YORK (Reuters) – Novartis AG must face a U.S. government lawsuit accusing it of paying millions of dollars in kickbacks to doctors so they would prescribe its drugs, after a federal judge ruled in a decision released on Monday that the government had offered evidence of a “company-wide kickback scheme.”

Switzerland’s national flag flies in front of the logo of Swiss drugmaker Novartis in Basel, Switzerland, January 30, 2019. REUTERS/Arnd Wiegmann

U.S. District Judge Paul Gardephe in Manhattan also rejected the Swiss drugmaker’s bid to keep key government evidence out of the case, and ruled that the government does not have to prove a direct “quid pro quo” agreement between Novartis and doctors for the company to be liable.

The ruling means that, unless Novartis settles, the case is headed for trial.

“We are disappointed in today’s decision and look forward to presenting our case at trial,” Novartis spokesman Eric Althoff said in an email. “We continue to believe that the government has insufficient evidence to support its claims.”

The case began in 2011 as a whistleblower lawsuit filed by Oswald Bilotta, a former Novartis sales representative. Such lawsuits, brought under the federal False Claims Act, allow individuals to sue on behalf of the government, which may choose to intervene.

The U.S. government and the state of New York both intervened in the case in 2013, accusing Novartis of paying doctors kickbacks so they would prescribe several of its drugs, including hypertension drugs Lotrel and Valturna and diabetes drug Starlix.

Those kickbacks included speaking fees for doctors at “sham” educational events, the lawsuit said, with one doctor being paid to speak at his own office eight times. The company also treated doctors to lavish meals, including a $9,750 dinner for three at a Japanese restaurant, according to the lawsuit.

Government health insurance programs Medicare and Medicaid were billed millions of dollars from 2002 to 2011 for drugs prescribed by doctors who took kickbacks, the lawsuit said, violating the False Claims Act. The government is seeking damages of three times what it was billed for allegedly fraudulent claims.

Novartis has previously settled U.S. allegations that it used illegal methods to promote its medicines.

In 2010, it agreed to pay $422 million to settle various civil and criminal allegations, including claims of paying kickbacks to doctors. Novartis pleaded guilty to mislabeling one drug as part of that settlement, but otherwise did not admit wrongdoing.

In October 2015, Novartis agreed to pay $390 million to settle claims that it paid rebates to speciality pharmacies to push two of its drugs, without admitting wrongdoing.

(This story has been refiled to make clear decision was made public on Monday)

Reporting By Brendan Pierson in New York; editing by Bill Berkrot

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