Novartis Settles US Fines Topping $1 Billion

07.07.2020 - Novartis has finally wrapped up a suite of bribery-related lawsuits in the US, paying well over $1 billion to settle two long running multifaceted cases within a week.

On Jul. 1, the Swiss drugmaker agreed to pay $729 million to resolve a seven-year dispute over kickbacks it allegedly paid to doctors, along with other schemes designed to boost sales of its products.

 In an unrelated Jun. 25 settlement, the company agreed to pay a total of $347 million for violating the US Foreign Corrupt Practices Act (FCPA).  This adds to the $195 million Novartis paid earlier this year to wrap up a US price fixing lawsuit against generics makers.

The pharmaceutical giant has already made financial provisions for all of the fines in its accounting.

As its fine in the larger of the two-pronged dispute, Novartis and the US federal government agreed on a payout of $591.4 million. The drugmaker also agreed to forfeit $38.4 million and hand over an additional $48.2 million to resolve healthcare fraud claims.

In the first part of the July settlement, concerning a whistleblower suit brought by a Novartis sales representative in 2011, US federal prosecutors said the company violated a federal statute prohibiting kickbacks.

The second part pertained to alleged offenses that included financially backing fraudulent prescription claim for Novartis products charged to the US state-sponsored healthcare programs Medicare and Medicaid as well as claims made to the Department of Veterans Affairs.

Regarding the alleged kickbacks, the prosecution said the drugmaker leveraged “tens of thousands” of sham speaker programs and events, including lavish dinners, to encourage doctors to prescribe its medicines.

“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,” Audrey Strauss, acting US attorney for Manhattan, said.

To remedy the situation, the pharmaceutical giant meanwhile has pledged to cut back on future speaker programs as well as lower the maximum amount of money it spends on such events.

In the late June settlement, the Swiss pharma agreed to pay $234 million to the US Department of Justice (DOJ) and $113 million to the Securities and Exchange Commission (SEC) for violating the Foreign Corrupt Practices Act (FPCA).

The charges here stemmed from state investigations into the company’s practices in Greece, Vietnam, South Korea and China. Prosecutors said Novartis bribed medical professionals, hospitals and clinics to prescribe its branded pharmaceuticals and use surgical products of its former subsidiary Alcon.

Greek subsidiary Novartis Hellas was accused of providing “improper benefits” to doctors between 2012 and 2015 to boost sales of its Lucentis macula degeneration treatment. In Vietnam, Alcon was charged with paying "inappropriate economic benefits” to doctors, though the company said the program was run by a distributor.

The drugmaker settled directly with US authorities over record-keeping infractions in Greece, Vietnam, South Korea and China. 

In bringing to a conclusion all of the cases that predated his term of office, CEO Vasant Narasimhan said Novartis is a different company today, with new leadership, a stronger culture, and a more comprehensive commitment to ethics.