Novartis reaches $642m settlement with US authorities

The Swiss pharmaceuticals group Novartis has agreed to pay $642m in settlements over claims it paid kickbacks to doctors and improperly funded purchases of its own drugs by patients receiving US government health benefits.

The deal settles civil allegations against its US arm, Novartis Pharmaceuticals Corporation, and is the company’s third big resolution with US authorities in recent months.

In March a Novartis unit, Sandoz, admitted price-fixing as part of a $195m criminal antitrust settlement. Last week Novartis, along with a current and a former subsidiary, agreed to pay a total of $347m to settle US criminal and civil foreign bribery investigations.

One of settlements announced on Wednesday concerned the alleged use by Novartis between 2010 and 2014 of charitable foundations to funnel money to patients receiving government benefits under the Medicare programme.

Patients using Medicare are required to pay part of the cost of a drug themselves, a measure intended to keep prices down. The Department of Justice claimed Novartis had illegally used three foundations to cover such payments for its drugs Gilenya and Afinitor.

The second settlement, accounting for $591m of the resolution, resolved allegations that between 2002 and 2011 Novartis had paid bribes to doctors by purportedly paying them to give speeches. In some instances, the justice department claimed, the “so-called speaker events never even took place”.

The speaker programme resulted from “decisions made by top management” at NPC’s headquarters in New Jersey and involved pressuring doctors who were paid to give speeches to prescribe more drugs, the justice department alleged, adding that Novartis sales representatives would often drop doctors from the programme if they failed to do so.

“For more than a decade, Novartis spent hundreds of millions of dollars on so-called speaker programmes, 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,” said Audrey Strauss, the acting US attorney for the southern district of New York.

As part of the settlements, Novartis has entered into a “corporate integrity agreement” with the inspector general at the US Department of Health and Human Services. The five-year agreement requires, among other things, Novartis to significantly curtail its paid speaker programme, restricting any events to virtual format only.

The resolutions did not include a “determination of liability”, the justice department said.

Vas Narasimhan, Novartis chief executive, said the settlements were “consistent with [a] Novartis commitment to resolve and learn from legacy compliance matters”.

“We are a different company today — with new leadership, a stronger culture and a more comprehensive commitment to ethics embedded at the heart of our company,” he added.