Novartis sets aside $700 million for possible settlement over DOJ charges of millions paid to docs for sale if its drugs

Pharmaceutical drugmaker Novartis announced it has set aside $700 million for a possible settlement of a Department of Justice lawsuit in which it is charged that the company paid hundreds of millions of dollars in kickbacks to doctors to induce them into prescribing drugs to patients to boost their sales. It is not clear as to whether $700 million will be sufficient to resolve the long running case in which the wrongdoing alleged took place between 2002 and 2011 and involves assertions of hundreds of millions in kickbacks to prescribers in the form of lavish meals and entertainment.

The Department of Justice has filed a complaint in the U.S. District Court for the Southern District of New York following a lawsuit originally filed under the whistleblower provisions of the False Claims Act. The case was brought by a former Novartis sales representative, Oswald Bilotta.

In U.S. ex rel. Bilotta v. Novartis Pharmaceuticals, the government asserts Novartis paid hundreds of millions of dollars of kickbacks to prescribers.The government further alleged Novartis sponsored “sham” educational programs at high-end restaurants between 2002 and 2011 that, in actuality, were intended to entertain doctors to induce them to prescribe Novartis drugs.

Novartis Chief Executive Officer Vas Narasimhan confirmed in a July 18 investor call that the company is setting aside funds for the settlement. “We’ve taken the legal provision of about $700 million related to the Southern District case,” Narasimhan said. “We’ve taken the provision in the context of the ongoing settlement discussions.”

“We can’t comment further as the discussions are ongoing,” Narasimhan added. “Once we have a further update we will, of course, provide it.”

These are not the only legal allegations the company is trying to resolve. Authorities in Greece, for example, are looking into allegations that Novartis paid kickbacks to more than 4,000 doctors and government officials in exchange for the promotion of Novartis’s drugs.