Novartis Rebuts Government Allegations of Misconduct

Following the filing of a second civil fraud lawsuit by the U.S. Attorney's Office for the Southern District of New York accusing Novartis (NYSE: NVS  ) of paying millions of dollars in kickbacks to doctors who prescribed its drugs, the Swiss pharmaceutical giant responded last week, saying it disputes the charges and will defend itself against them.

Novartis said the first suit pertains to a previously disclosed investigation into discounts and rebates to specialty pharmacies for the drug Myfortic, which it contends is not only a customary and appropriate practice, but a legal one as well that the government has recognized.

The second suit involves its speaker programs related to the drugs Lotrel, Starlix, and Valturna.

Contrary to the government's allegation that its speaker programs lacked a legitimate business purpose, Novartis contends they are "promotional programs designed to inform physicians about the appropriate use of medicines." It says it has numerous controls in place to help ensure they are conducted legally, and like the discount and rebate program, the speaking programs are an accepted and customary industry practice.

Novartis president Andre Wyss said, "We disagree with the way the government is characterizing our conduct in both of these matters and we stand behind our compliance program. Novartis Pharmaceuticals Corp. invests significant time and resources to help ensure we conduct our business in an ethical and responsible manner. We are committed to doing it right."

The pharmaceutical said the lawsuits are a significant expansion of the Anti-Kickback Statute that is "inconsistent with law and policy in this area," and by doing so the government will "undermine pharmaceutical company discounting practices that benefit both consumers and payers, including the Government."

The charges stem from a whistle-blower lawsuit first filed against Novartis by a former sales representative in January 2011 and which the federal government subsequently joined.

Novartis employs 129,000 full-time employees in more than 140 countries and generated $56.7 billion in revenues in 2012.


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