Novartis Agrees To $678 Million False Claims Act Settlement With SDNY For Sham Speaker Programs

Novartis Pharmaceuticals Corp. agreed earlier this month to pay $678 million to settle an SDNY False Claims Act case. The SDNY alleged that Novartis violated the False Claims Act and the Anti-Kickback Statute by giving doctors cash payments, exorbitant speaker fees, and expensive dinners to induce them to prescribe Novartis cardiovascular and diabetes drugs. The government alleged that for a ten-year period, between 2002 and 2011, Novartis hosted tens of thousands of speaker programs and other events that were a means of providing bribes to doctors.

Novartis made numerous admissions as part of the False Claims Act settlement, including the following:

• Novartis representatives selected high-prescribing doctors to become speakers and intended that the honoraria paid to them would induce them to continue to write prescriptions for Novartis products.
• Novartis paid over $320,000 to a doctor who wrote over 8,000 prescriptions for the drugs at issue; over $220,000 to a doctor who wrote over 9,000 prescriptions; and over $200,000 to a doctor who wrote over 3,600 prescriptions.
• Novartis representatives hosted speaker programs at expensive restaurants throughout the country, intending to induce doctors attending the dinners to write more Novartis prescriptions.
• More than 12,000 speaker programs had spending that was considerably in excess of the $125 per person limit set by the Novartis compliance policies. Payments at specific events included payments of $448, $521, and $680 per person on food and alcohol.
• At many speaker programs, sales representatives did not require the speaker to deliver any presentation, or allowed them to click through their power point in a matter of minutes.
• Some doctors were paid for speaking at events that never took place, and one sales representative arranged for a restaurant to create fake receipts for dinners and used the budgeted funds to distribute gift cards.

The government alleged that the sham speaker programs were disguised bribes that were designed to induce doctors to prescribe Novartis drugs.

SDNY Judge Gardephe adjourned a May 2019 trial in the case as a settlement appeared close.  The government had asserted that at trial it would prove more than 100,000 sham events across the country over a ten-year period, using 121 witnesses, while Novartis listed 54 trial witnesses in its defense.

As part of the settlement, Novartis also agreed to a corporate integrity agreement that will strictly limit speaker programs and reduce the amount spent on those programs.  Speaker programs may only be conducted in virtual format, so the speakers are not in the same location as any audience member.  Also, speaker programs may not take place in restaurants and alcohol may not be served.

The allegations in this case dated to the ten-year period ending in 2011, and pharmaceutical companies have become considerably more careful in the last decade with respect to speaker program expenditures.  Nevertheless, the Department of Justice will continue to aggressively pursue payments to doctors that are viewed as disguised bribes to induce prescriptions.