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US sues Novartis for paying kickbacks

Indian protesters march during a demonstration against Swiss drug manufacturer Novartis in Mumbai on December 21, 2012
Indian protesters march during a demonstration against Swiss drug manufacturer Novartis outside their offices in Mumbai on December 21, 2012. The US Justice Department on Friday accused drug maker Novartis of paying kickbacks to doctors to prescribe the c

The US Justice Department on Friday accused drug maker Novartis of paying kickbacks to doctors to prescribe the company's drugs over rival products.

In the second US lawsuit against the Swiss firm this week, the Justice Department said its US unit Novartis Pharmaceuticals had boosted sales of its more expensive brand-name drugs by offering incentives to prescribing doctors that were ultimately paid for by public health-care programs.

The lawsuit, filed in the US district court in New York, alleged that, to promote Novartis drugs like Lotrel and Valturna, used for hypertension, and Starlix, for diabetes, the company paid doctors to make speeches at what were only "social occasions" and put on lavish dinners for the doctors.

The payoffs involved "thousands" of speaker programs in which the doctors "spent little or no time discussing the drug at issue."

"Instead, Novartis simply wined and dined the doctors at high-end restaurants with astronomical costs, as well as in sports bars, on fishing trips, and at other venues not conducive to an educational program," the suit said.

Such actions "were, in reality, kickbacks to the speakers and attendees to induce them to write prescriptions for Novartis drugs," the department said.

The payments violated the US Anti-Kickback Statute and led to the government paying "false claims" via its health-care programs for Novartis drugs.

On Tuesday the government filed suit against Novartis for paying kickbacks to pharmacies to substitute its drug Myfortic for cheaper generic drugs used to help transplant patients.

The payments to the pharmacies amounted to tens of millions of dollars, and took Myfortic sales in those pharmacies to $100 million, with nearly half that paid by the government's Medicare and Medicaid schemes, the suit said.

In a statement, Novartis disputed the claims of both cases, and said the government was expanding the definition of "kickback" beyond the law.

"Discounts and rebates by pharmaceutical companies are a customary, appropriate and legal practice as recognized by the government itself."

The government's stance, Novartis said, "threatens to undermine pharmaceutical company discounting practices that benefit both consumers and payers, including the government."

In addition, it said, "physician speaker programs are an accepted and customary practice in the industry."

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