Novartis Settles Claims It Paid Pharmacies to Promote Drug

Under the agreement, the company will pay $390 million to the United States, New York, and over forty other states.

Novartis is agreeing to pay $390 million to the United States, New York, and over forty other states to settle claims the company paid kickbacks to three specialty pharmacies to incentivize them to push Medicaid patients to order refills of the drug Exjade.

The announcement was made in a press release issued by New York Attorney General Eric R. Schneiderman. Since early 2014, New York has led a group of states that sued Novartis under their respective False Claims Act statutes. The agreement with Novartis is the third settlement in connection with the case.

The settlement resolves allegations that between 2007 and 2012 Novartis paid kickbacks to three specialty pharmacies, BioScrip, Accredo, and US Bioservices. The pharmacies were selected by Novartis to be part of a closed distribution network through which most Exjade prescriptions in the United States were filled.

The pharmacies shipped most Exjade prescriptions to patients by mail and were supposed to call patients to set up the shipments and obtain consent for refills. The pharmacies billed themselves as specialty pharmacies that could arrange for these shipments and run educational programs for patients.

In their court filings, the government plaintiffs alleged that Novartis paid kickbacks to the pharmacies to corrupt the pharmacies' interactions with patients by inducing the pharmacies to exaggerate the dangers of not taking Exjade, emphasize Exjade's benefits, and downplay the severity of Exjade's side effects. The scheme began after Exjade failed to meet Novartis' internal sales goals and Novartis discovered that refill rates for Exjade were lower than anticipated.

In the course of the scheme, Novartis pressured the specialty pharmacies by threatening to exclude them from the EPASS network or to reduce the number of patient referrals they received from EPASS. In addition, Novartis set up a contest in which the pharmacy that kept patients on Exjade the longest would receive additional patient referrals from EPASS, according to the press release.

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