News

According to reports from the Wall Street Journal, the New York Times, the Associated Press, Reuters, the BBC and hundreds of media outlets throughout the world, Swiss drug giant Novartis is paying $422.5 million to settle criminal and civil investigations into the illegal off-label marketing of their anti-seizure medicine Trileptal and no less than five other drugs they manufacture and distribute.

Zane David Memeger, (left in photo), a United States attorney, announced the significant admission and settlement this week with Nicholas DiGiulio from Health and Human Services (center) and Thomas Doyle of the F.D.A. (far right).

Federal prosecutors originally accused Novartis of paying illegal kickbacks to health care professionals and practitioners through speaker programs, advisory boards, entertainment, travel and meals.

Novartis joins a growing list of pharmaceutical companies that we have reported have been made to settle a number of government investigations, criminal and civil lawsuits into fraud in the last few years, including Pfizer, which paid $2.3 billion; Eli Lilly, $1.4 billion; Allergan, $600 million; AstraZeneca, $520 million; Bristol-Myers Squibb, $515 million; and Forest Laboratories, $313 million.

Pfizer, Lilly, Allergan and Forest ALL pleaded guilty to crimes in these cases.

The Novartis settlement includes a $170 million criminal fine and $15 million in criminal forfeiture by Novartis Pharmaceuticals, its United States subsidiary. The plea was announced by the office of the United States attorney in Philadelphia, which has specialized in health care fraud investigations of companies that promote drugs for uses not approved by the Food and Drug Administration, known as “off-label marking.”

Federal prosecutors said Novartis illegally promoted Trileptal for neuropathic pain and bipolar disease, and singled out illegal pay offs to psychiatrists and pain specialists who were known to use the drug off-label. While physicians are legally permitted to use approved drugs for any (approved) purpose, companies are prohibited from promoting them for conditions not authorized by the F.D.A.

Novartis settled the investigation into their other 5 “wonder” drugs for $237.5 million bringing their settlement total to $422.5 million.

Following the announcement of the settlement agreement, Erik Gordon, an assistant professor at the University of Michigan school of business who follows the drug industry, said it was “easy to stifle a chuckle” when the company announced a guilty plea and, in the same news release, promised to continue ethical conduct.

We should point out that although prosecutors had evidence that top management at Novartis had approved illegal marketing from July 2000 to June 2004, no individual was named or charged.

And we want to highlight the fact that 4 whistle-blowers in this case will share more than $25 million under a government program intended to encourage company insiders to report illegal activity.

Novartis stock fell by about 1 percent an hour before the 1 p.m. announcement and closed at $57.67, down 0.53 percent.

And so we don’t leave you in the dark about the other 5 “wonder” drugs Novartis was busted for in the civil settlement, these were; Diovan, a hypertension drug that is the company’s top-selling product, at $6 billion last year; Sandostatin, a drug to treat a growth hormone disorder that had worldwide sales of $1.2 billion last year; Exforge, a hypertension drug that sold $671 million; Tekturna, a blood pressure medicine that sold $290 million; and Zelnorm, a medicine for irritable bowel syndrome and constipation that was later withdrawn from the United States market.

We saw have seen this coming...

In a filing last winter, Novartis said it was increasing reserves by $318 million in the fourth quarter, to a total of $397 million, to pay for pending settlements into past marketing practices.

As part of the settlement, Novartis also signed a five-year corporate integrity agreement with the Department of Health and Human Services, which requires the company to monitor its sales practices and report any irregularities. Yeah, good luck with that one!

At WINHS.ORG we’d like to see stepped-up enforcement of executive culpability and corresponding penalties (e.g. jail time) in cases like this. We don’t see any shortage of cases like this one and many others in the immediate future. We look to our members to push this point with their government representatives.