Agreement

Novartis to pay $422.5 million to resolve U.S. Trileptal marketing probes

A U.S. unit of Novartis AG, the Swiss drugmaker, agreed to pay $422.5 million to resolve criminal and civil investigations into the marketing of its epilepsy drug Trileptal.

Novartis Pharmaceuticals said in a statement that it will plead guilty to a misdemeanor in federal court in Philadelphia and pay a $185 million fine. The company also agreed to pay $237.5 million to resolve civil allegations over promoting Trileptal for uses not approved by the U.S. Food and Drug Administration, and for paying kickbacks to doctors to prescribe that drug and five others.

"The goal was to enhance profits through improper marketing," U.S. Attorney Zane Memeger said in an interview after a news conference in Philadelphia. The company, he said, was driven by greed.

The civil settlement resolves lawsuits filed by four whistleblowers under the federal False Claims Act, which lets private citizens sue on behalf of the government and share in recoveries. On Sept. 15, a Forest Laboratories Inc. unit agreed to plead guilty and pay $313 million in a whistleblower case over its Levothroid thyroid drug, and Allergan Inc. agreed Sept. 1 to plead guilty and pay $600 million to resolve civil and criminal probes over its drug Botox.

Novartis, which first said in January that it would plead guilty, signed a five-year corporate integrity agreement with the inspector general of the U.S. Department of Health and Human Services.

'High Standards'

"NPC will continue its commitment to high standards of ethical business conduct and regulatory compliance in the sale and marketing of our products," Andy Wyss, president of Novartis Pharmaceuticals, said in a statement.

Novartis will plead guilty to introducing misbranded drugs into interstate commerce from July 2000 to December 2001.

The company got FDA approval in January 2000 to use Trileptal for epilepsy, and was disappointed with sales, according to the criminal charge. From July 2000 to June 2004, the company promoted the product for bipolar disorder and neuropathic pain, which involved far more patients, prosecutors said.

Novartis "trained, managed, and rewarded its sales staff for these off-label promotional efforts," including using medical professionals to urge doctors to prescribe off-label, according to the criminal charge. The campaign allowed the company to reap "hundreds of millions of dollars" in profit.

Doctor Kickbacks

The company paid kickbacks to encourage doctors to prescribe Trileptal, as well as Diovan, Exforge, Tekturna, Zelnorm, and Sandostatin, according to the civil allegations. Trileptal had sales of $295 million in 2009 and Diovan, a hypertension drug and the company’s top medicine, had sales of $6 billion.

The settlement resolves lawsuits by four whistleblowers, including Jeremy Garrity, who will split $25.7 million. Garrity, who worked in the cardiovascular division, alleged the company made excess payments disguised as consulting fees or honoraria. He also claimed that Novartis recruited doctors with a high volume of prescriptions for its speakers bureau.

"As long as they had a prescription pad and were willing to prescribe our products, they qualified as Novartis speakers," Garrity said in a statement by his law firm, Nolan & Auerbach in Fort Lauderdale, Florida. "The company's illegal practices were snowballing and nobody was stepping up to stop them."

Medicaid Share

State Medicaid programs will receive $88.2 million of the civil settlement.

"Novartis clearly had a systematic plan of bribing doctors in order to increase sales," said Patrick Burns, a spokesman for Taxpayers Against Fraud, a Washington nonprofit advocate for the False Claims Act.

"Not only did it steal from American taxpayers, it put patients at risk because doctors were prescribing medications for bipolar disorder that were not approved for that disorder and did not work as well as other medications that were approved," he said in a phone interview.

The whistleblower lawsuits, made public today, were filed in federal court in Florida in 2003, and in Philadelphia in 2004, 2006 and 2008.

The cases are United States ex rel. Jim Austin v. Novartis Pharmaceuticals Corp., 03-cv-01551, United States District Court, Middle District of Florida (Tampa); United States ex rel. Steve McKee v. Novartis, 04-cv-01664, United States ex rel. Daryl Copeland v. Novartis, 06-cv-01630, and United States ex rel. Jeremy Garrity v. Novartis, 08-cv-02588, all in United States District Court, Eastern District of Pennsylvania (Philadelphia).

(Published by Bloomberg - September 30, 2010)

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