U.S. Accuses Novartis of Providing Kickbacks

“Using the lure of kickbacks disguised as rebates, Novartis co-opted the independence of certain pharmacists and turned them into salespeople for one of its drugs,” Preet Bharara, the United States attorney for the Southern District of New York, said in a statement.

The drug involved, Myfortic, is an immune suppressant used to help prevent rejection of transplanted kidneys. It competes with the Roche drug CellCept and, since 2009, with generic versions of CellCept.

The lawsuit, filed in Federal District Court in Manhattan, contended that Novartis promised rebates and discounts to 20 or more pharmacies if they would persuade doctors to switch patients to Myfortic from CellCept, or to keep patients on Myfortic after the cheaper generic versions of CellCept reached the market.

Novartis said in a statement that it disputed the government’s claim and would defend itself.

In filing the suit, the federal government is intervening in a whistle-blower lawsuit that remains under seal, as does the identity of the whistle-blower.

Pharmacies can profit if the amount they are paid for a drug by patients, or their insurers, including Medicare and Medicaid, exceeds what they pay to buy the drug. Getting a discount on the drug from a manufacturer can increase a pharmacy’s profit.

Prosecutors say in their lawsuit that Medicare and Medicaid paid tens of millions of dollars in claims for Myfortic that were “tainted” by the kickbacks.

That does not mean, however, that Medicare and Medicaid lost that much. CellCept and Myfortic cost about the same, according to the lawsuit, so switches from the brand name CellCept to Myfortic would not have appreciably raised federal costs.

Moreover, the suit notes, there are hundreds of pharmacies that prescribe Myfortic and the purported kickback scheme involved only about 20 of them, affecting just “hundreds, possibly thousands” of patients.

The suit says, however, that Novartis chose particularly influential pharmacies which could earn tens or hundreds of thousands of dollars in rebates.

The suit says that pharmacies couched their advice to doctors to use Myfortic as professional recommendations, concealing any mention of the financial inducement the pharmacy was receiving from Novartis.

While the contracts between Novartis and the pharmacies mentioned the discounts, the commitments Novartis received in return were left out of the contracts, the suit says.

In one example, the suit says that Novartis directed more than $650,000 in kickbacks to Bryant’s Pharmacy in Batesville, Ark., which submitted 8,300 Myfortic claims to Medicare Part B alone, receiving more than $3.2 million in reimbursement.

The suit, citing an internal memo by a Novartis account manager, says Bryant’s drove its annual Myfortic sales to more than $1 million a year from $100,000. And when the generic version of CellCept arrived in 2009, the pharmacy argued to doctors that patients doing well on Myfortic should not be switched.

Steve Bryant, owner of Bryant’s Pharmacy, said doctors made the decisions on which drug to use. He said the discounts were given by Novartis to make it affordable for the pharmacy to dispense Myfortic without losing money from inadequate Medicare reimbursement.

None of the pharmacies was named as a defendant in the lawsuit.

Myfortic is one of Novartis’s top 20 drugs, though not a star. Sales in the United States were $239 million in 2012, up 20 percent from 2011. Global sales were $579 million.

Article source: http://www.nytimes.com/2013/04/24/business/us-accuses-novartis-of-providing-kickbacks.html?partner=rss&emc=rss