Novartis pays $390 million to settle whistleblower suit

Novartis AG agreed to pay $390 million to settle a lawsuit in which the U.S. government claimed the Swiss company paid kickbacks to pharmacies to boost sales of some of its prescription drugs.

The whistleblower suit was filed in 2012 by former Novartis employee David Kester who says Novartis engaged in illegal referral agreement with specialty pharmacies to increase sales of its drugs.

The U.S. sued Novartis over two drugs, Exjade and Myfortic, claiming the company had referred patients to specialty pharmacies and paid kickbacks in the form of rebates to get those pharmacies to recommend the drugs to patients and to increase sales. Novartis said in a statement today the agreement covers claims on the two medicines, one designed to remove excess iron from the blood of transfusion patients and the other to prevent rejection of kidney transplants, as well as another three: Tasigna, Gleevec and TOBI.

Beginning in 2005, Novartis gave pharmacies rebates to recommend Exjade and Myfortic to patients over generic alternatives, or to keep dispensing them, the U.S. said. Specialty pharmacies also submitted thousands of fraud-tainted reimbursement claims to Medicare and Medicaid for the two drugs, the government said. The three specialty pharmacies named by Mr. Kester in his qui tam case have already settled with the Government for their part in the kickback scheme. They are Bioscript which settled for $15 million, Accredo Health Group and Express Scripts which settled for $60 million combined. The whistleblower, Mr. Kester is represented by Shelley Slade at Vogel, Slade & Goldstein.

Jeffrey Newman represents whistleblowers but is not involved in this case.