Novartis pays $672M for kickback scheme as Vas Narasimhan tries to distance pharma giant from shady behavior

Novartis has reached another large settlement to resolve misconduct allegations, agreeing to pay more than $672 million to settle claims that it had spent hundreds of millions of dollars on lavish dinners, so-called speaking fees and expensive alcohol “that were nothing more than bribes” to get doctors to prescribe Novartis medications.

The top-shelf alcohol and lavish meals included a $3,250 per person night at Nobu in Dallas, a $672-per person dinner at Washington DC’s Smith & Wollensky and a $314 per person meal at Sushi Roku in Pasadena, according to the Justice Department complaint. There were at least 7 trips to Hooters and fishing trips in Alaska and off the Florida coast. Each of these events were supposed to be “speaker programs” where doctors educated other doctors on a drug, but the DOJ alleged many were “bogus” wine-and-dine events where the drug was barely mentioned, if at all.  (“Nobody presented slides on the fishing trips,” the complaint says.)

The civil suit, first filed by a Novartis whistleblower in 2011 and joined by the Justice Department two years later, covers company conduct from 2002 to 2011. They largely cover cardiovascular drugs, including Lotrel, Diovan, Exforge, Tekturna, Valturna and Tekamlo. A Justice Department statement said that Novartis made “extensive factual admissions” in the settlement.

“For more than a decade, Novartis spent hundreds of millions of dollars on so-called speaker programs, including speaking fees, exorbitant meals, and top-shelf alcohol that were nothing more than bribes to get doctors across the country to prescribe Novartis’s drugs,” said acting US Attorney Audrey Strauss.

In a second settlement, Novartis agreed to pay $51.5 million to resolve allegations it funneled money to cover patients’ co-pays and illegally subsidize the cost of its own high-priced drugs.

The resolutions come as CEO Vas Narasimhan tries to distance the company from its occasionally unsavory reputation, saying in a statement today that they are “a different company today” than they were during the period covered by the lawsuit. He added that they were moving toward a digital system that would largely move away from speaking programs.

”Today’s settlements are consistent with Novartis commitment to resolve and learn from legacy compliance matters,” Narasimhan said. “We are a different company today — with new leadership, a stronger culture, and a more comprehensive commitment to ethics embedded at the heart of our company. I have been clear that I never want us to achieve commercial success at the expense of our values — our values must always come first and are the foundation of everything we do. With these agreements we mark an important milestone on our journey to build trust with society as we continue reimagining medicine to improve and extend lives all around the world.”

Yet this is not the first time that Novartis has promised reform. Much of the complaint from today’s settlement centers on the fact that the lavish dinners took place while the Swiss pharma was handling a different kickbacks lawsuit and, in some instances, after they had signed a Corporate Integrity Agreement. That lawsuit was settled in 2010 for $442 million.

A week ago, Novartis paid $345 million to resolve bribery charges related to actions the company took in Greece, South Korea and Vietnam. And earlier this year, they pled guilty and agreed to pay $195 million to charges that its generics unit, Sandoz, engaged in price fixing.

They’re not out of the woods yet. In June, 51 attorneys general sued a laundry list of generics makers for more price-fixing charges. Sandoz was at the top of their list.

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