The Swiss drug giant Novartis has agreed to pay $422.5 million to settle criminal and civil investigations into the marketing of the antiseizure medicine Trileptal and five other drugs, officials said on Thursday.
The action, including a guilty plea to a misdemeanor and a $185 million criminal fine and forfeiture by Novartis Pharmaceuticals, its United States subsidiary, was announced by the United States attorney in Philadelphia, which has specialized in health care fraud. This is the latest in a series of crackdowns by federal prosecutors and states that have been investigating pharmaceutical companies for illegally promoting drugs for uses not authorized by the Food and Drug Administration.
Federal prosecutors said Novartis illegally promoted Trileptal for neuropathic pain and bipolar disease, targeting psychiatrists and pain specialists who were known to use the drug off-label. Physicians are free to use any approved drug for any purpose, but companies are prohibited from promoting them for conditions not approved by the F.D.A.
The government accused Novartis of paying illegal kickbacks to health care professionals through speaker programs, advisory boards, entertainment, travel and meals. But aside from pleading guilty to one misdemeanor charge of mislabeling, which Novartis had announced in February and agreeing to pay the $185 million fine, the company denies any other wrongdoing. [...]
In the agreement settling other parts of the government investigation, Novartis paid $237.5 million to resolve allegations that it had caused illegal claims to be submitted for five other drugs but did not acknowledge any culpability.
They are Diovan, a hypertension drug that is the company’s top-selling product at $6 billion last year; Sandostatin, a drug to treat a growth hormone disorder that had $1.1 billion worldwide sales last year; Exforge, a hypertension drug that sold $671 million; Tekturna, a blood pressure medicine that sold $290 million; and Zelnorm, a medicine for irritable bowel syndrome and constipation. [...]
Sen. Ron Wyden (D-OR) is calling for an investigation into pharmaceutical giant Novartis, after it paid President Trump's personal attorney Michael Cohen a total of $1.2 million, according to a source familiar with the matter.
Blitzer: Robert Mueller also had known — we have confirmed for months about Michael Cohen's LLC, called Essential Consultants, which is now the center of a growing scandal around Cohen, apparently trying to sell access to the president. Does that suggest to you, Senator, that his investigation is much broader than previously known?
It certainly is, again, a new development, and a troubling one. And what America has seen here raises the spectre of corruption in the White House. I have rarely seen something like this, it really in effect sounds like our government for sale. It's a corporate shakedown. And by the way, as the ranking Democrat on the Senate Finance Committee, we have jurisdiction over the drug companies and tomorrow we'll be asking some pretty pointed questions of Novartis.
Blitzer: Talk about that. Is there something Congress needs to do as far as you're concerned?
Wyden: Well, I wanna know what Novartis thought it was buying for the 1.2 million dollars. This was a pretty crucial time. They were looking at getting a cancer drug approved, they were negotiating with medicare on the issue of what taxpayers would pay for drugs. Cohen was getting paid more by the lobbyists. I wanna know who approved the deal with Novartis. The deal stinks. And even the employees, many of whom seem outraged.
Blitzer: So, are you calling for a full-scale investigation right now?
Wyden: Yeah, yeah. We are going to be initiating that on the Finance Committee. We have jurisdiction over drug companies. And this is the time when so many seniors and consumers are seeing their prices going through the stratosphere, and we have what looks like a corporate shakedown and the company handing out money to somebody like Michael Cohen when what they aught to be doing is focussing on lowering prices for seniors.
Blitzer: These companies say they were simply paying for insight into the new administration from Michael Cohen. That kind of consulting, as you know, is extremely common in Washington. Members of both parties do it. Do you have evidence, though, that there was something more nefarious?
Wyden: As I indicated, I have rarely seen something this gross. Something like this didn't happen in either the Bush or the Obama administrations.
Novartis lawyer steps down over Trump lawyer payment
ZURICH (AFP) — Swiss pharmaceutical giant Novartis on Wednesday announced the retirement of its top legal expert, as he apologised for payments made by the firm to Donald Trump's personal lawyer Michael Cohen.
The announcement comes after Novartis was dragged into the scandal over Cohen's payment of $130,000 to US porn actress Stormy Daniels just days before the 2016 presidential election. [...]
Last week, Daniels' lawyer Michael Avenatti wrote on Twitter that Novartis and US telecoms giant AT&T had used the services of Cohen's firm Essential Consultants — the same company used to make the payment to Daniels.
Cohen is currently under investigation for accepting payment from companies and others seeking access to the White House [...]. [...]
On May 9, Novartis said it had signed a one-year contract for $100,000 a month with the firm in February 2017, seeking advice on the new administration's public health policy.
"Novartis believed that Michael Cohen could advise the company as to how the Trump administration might approach certain US healthcare policy matters, including the Affordable Care Act," Novartis said.
Following a meeting with Cohen, the company determined that he and his firm would in fact not be able to provide the services it sought, it explained.
However, the contract could not immediately be terminated and Novartis had to wait until the full $1.2 million had been paid to Cohen's company. [...]
(#2 of 7) Novartis Misconduct in China
Novartis Agrees to Settle Bribery Charges Against Chinese Subsidiaries for $25 Million
On March 23, 2015, Swiss-based pharmaceutical company Novartis AG ("Novartis") reached a civil settlement with the United States Securities and Exchange Commission ("SEC") for violating the internal controls and books and records provisions of the Foreign Corrupt Practices Act ("FCPA"), the terms of which included Novartis agreeing to pay $21.5 million in disgorgement of profits, $1.5 million in prejudgment interest, and a $2 million civil penalty. Novartis neither admitted nor denied the SEC’s allegations, which claimed that two of Novartis’ Chinese subsidiaries engaged in various schemes from 2009 to 2013 to bribe health care professionals ("HCPs") in order to increase sales. According to the SEC administrative order, these Chinese-based business units obscured corrupt payments by instead identifying them as legitimate expenses for conferences, lecture fees, marketing events, education seminars, and medical studies. These false records ultimately were incorporated into the books and records of the Novartis corporate parent.
The SEC provided details in its administrative order about some of the overseas conduct that it believed caused Novartis’ inaccurate financial accounting. For example, in 2011, two sales representatives of Sandoz China (an indirect subsidiary of Novartis based in Shanghai) submitted approximately $8,100 in falsified receipts for "holiday gift" purchases in connection with employee expense reimbursement requests, which requests were approved by a regional sales manager. The reimbursed funds then were used to provide illegitimate entertainment to HCPs, such as spa and sauna sessions. Certain Sandoz China employees also allegedly maintained projections in spreadsheets directly linking cash value "investments" to be provided to HCPs in exchange for guaranteed monthly prescription volumes, with the top tier of HCPs identified in the spreadsheet as "money worshippers." Other HCPs were paid for participation in what the SEC described as sham medical studies designed by Sandoz China in 2009 and 2010, in which doctors effectively received financial rewards for each prescription of a particular Novartis drug without having to submit any legitimate clinical data.
Other improper benefits purportedly were extended by both Sandoz China and Novartis China (another indirect Novartis subsidiary based in Beijing) by utilizing Chinese travel agencies to arrange transportation, accommodation, and meals for HCPs in connection with company-sponsored educational events. Many of those events, however, allegedly did not include any educational purpose, or were accompanied by disproportionate paid entertainment and other recreational activities. The SEC offered an example from 2009, when Sandoz China allegedly sponsored 20 Chinese HCPs to attend a third-party medical congress in Chicago, and provided travel packages that included an excursion to Niagara Falls, $150 in "pocket" or "walking around" money, and payment of cover charges at an adult entertainment club. [...]
(#3 of 7) Novartis Misconduct in Greece
Novartis is under investigation for allegedly bribing thousands of Greek doctors
Greece’s financial police have raided the Athens headquarters of Novartis, and a team of agents from the US Federal Bureauof Investigation have flown in to study seized company records, as part of an expanding probe into claims that the drug company has bribed over 4000 Greek doctors to prescribe or support the reimbursement of its drugs.
US investigators have been probing Novartis’s foreign marketing practices for two years. Greece’s investigation, ordered by the country’s supreme court prosecutor, was announced by the government after intense media speculation following a public suicide attempt on New Year’s Day by a Greek Novartis executive.
The executive had requested a meeting with Eleni Raikou, the head of Greece’s anti-corruption prosecutor’s office, at the Athens Hilton but became distraught and threatened to jump out of a window. Local media reported that his family were brought and that a police negotiator persuaded him to come back inside.
According to Greek media reports, last year two Novartis executives in Greece gave documents to investigators of the US Securities and Exchange Commission indicating that more than 4000 public and private doctors were bribed to prescribe expensive cutting edge Novartis cancer drugs or to promote their use in the public system. [...]
Novartis Bribery Claims:
Greek MPs Vote to Investigate Top Politicians
MPs to look into accusations 10 senior officials accepted bribes from Swiss pharmaceutical firm
The Greek parliament is to investigate 10 of the country’s top politicians over accusations they accepted bribes from the Swiss pharmaceutical firm Novartis in return for patronage that resulted in huge losses for Greece. [...]
Officials in Tsipras’ leftist-led administration have described the alleged bribery scandal as the worst since the creation of the modern Greek state almost 200 years ago. It has raised fears of political instability at a time when many had hoped the country was finally returning to normality after years of tumult. [...]
Few question that wrongdoing was committed. A confidential report by prosecutors originally tipped off by US authorities alleged that bribes of as much as €50m (£44m) were paid to politicians between 2006 to 2015 to promote Novartis’s products. More than 4,500 doctors are accused of malpractice as well. The company is alleged to have offered not only bribes but also paid holidays and home appliances to physicians who endorsed its products. [...]
(#4 of 7) Novartis Misconduct in Italy
Novartis, Roche CEOs in Italy facing prosecution over secret pact to prevent Avastin use in ophthalmology
MILAN, Dec 1 (APM) — The country heads of Novartis and Roche in Italy are facing prosecution over an alleged secret marketing pact designed to prevent sales of Avastin in ophthalmology to benefit Lucentis, Corriere della Sera reported on Saturday.
Rome’s public prosecutor, Stefano Pesci, has completed an investigation into the case which started after the competition authority AGCM fined the two companies a total of 182 million euros for anti-competitive commercial practices in 2014.
Novartis’ Georg Schroeckenfuchs and Roche’s Maurizio De Cicco will be put on trial as representatives of their respective companies if judges decide that the prosecution should be continued.
According to Corriere della Sera, Pesci has decided to proceed with the case on the grounds that there is evidence of a secret agreement to ensure Lucentis (ranibizumab), which cost 900 euros, was bought rather than Avastin (bevacizumab) whose off-label use in ophthalmology cost just 80 euros.
"Unlawful behaviour aimed to interfere with the market and thus to achieve unfair capital gains. The dishonest emphasizing of the possible risks of Avastin led to the exclusion of the product from the list of drugs reimbursed by the national health service," Pesci was said to have written in his report on the case. [...]
(#5 of 7) Novartis Misconduct in Japan
Academy of Applied Pharmaceutical Sciences
Novartis Faces Criminal Charges in Japan Diovan Scandal
Last year, Japanese whistleblowers exposed the falsification of trial data for Diovan — Novartis’ blockbuster blood pressure drug. Ultimately, the ensuing investigation led to the arrest of one man, Nobuo Shirahashi, who was accused of manipulating the Diovan data and skewing the clinical research published by two Japanese universities.
Last month, Shirahashi was detained for questioning and then recently re-arrested only days ago as more evidence emerged to link him to the falsified test results. Now, it seems both Novartis and its ex-employee will face criminal charges for misleading consumers about the range of Diovan’s therapeutic powers.
Novartis’ Japanese subsidiary, Novartis Pharma KK first found itself in hot water with Japanese authorities over claims of false advertising. It seems Diovan’s test data was contrived to portray the drug as not only an effective treatment for blood pressure, but also as a method for preventing stroke and angina. In January 2014, Japan invoked a clause in their pharmaceutical law that bans false or misleading advertising, asserting that there was no actual proof of Diovan’s preventative powers, and that the data used to support them was manipulated by Shirahashi.
It’s been suggested that Shirahashi interfered with Diovan’s pharmaceutical testing in order to give the drug a competitive edge. There are plenty of drug pressure medications on the market, and the ex-employee thought that by extending Diovan’s therapeutic reach, Novartis could differentiate itself to consumers. Several highly regarded journals published studies based on the false data, such as the renowned European Heart Journal, which has been forced to retract its research.
Even though Novartis has determined that Shirahashi acted alone and admits no knowledge of his deceit, the Swiss drugmaker is being held accountable for the actions of its former employee. Japan law features a dual liability clause that ensures companies pay for failing to oversee their workers — in this case, the maximum penalty is just under USD$20,000. The fine may seem like small change for Big Pharma, but Novartis will feel the sting reputationally if not financially. [...]
South Korea Fines Prominent Pharmaceutical Manufacturer in Latest Anti-Corruption Enforcement Efforts
In a sign that South Korea is ramping up its anti-corruption enforcement efforts, Korean authorities announced on April 27 that they plan to levy a $48 million fine against Swiss pharmaceutical giant Novartis International AG for allegedly bribing physicians to use its products. In addition to the fine, the Korean Ministry of Health and Welfare will also suspend state insurance reimbursements for several of Novartis’ products. The fine and related penalties come eight months after Korean authorities indicted six current and former Novartis executives (along with over a dozen Korean doctors and editors of medical journals) for their role in the alleged kickback scheme, and seven months after South Korea implemented a sweeping new anti-corruption law.
Korean authorities allege that between 2011 and 2016, Novartis paid around $2.3 million in bribes to physicians, in the guise of funding of academic events, whereby Novartis would arrange for a scientific journal to host medical symposia and then would make cash "travel expense" payments to participating doctors. Novartis Korea was subject to a highly-publicized government raid last year, in which Korean prosecutors seized various documents and financial records from the company. Subsequently, Korean prosecutors criminally charged six current and former executives in August 2016, along with fifteen physicians and six medical journal publishers. Those individuals’ criminal trials are currently underway. Novartis Korea issued a statement last week that it acknowledged and accepted the government’s fine, further stating that "We do not tolerate misconduct and are continuing to invest significant efforts to fully embed a culture of compliance throughout our Korean organization."
This is not Novartis Korea’s first domestic enforcement action. In 2011, Novartis and several other multinational pharmaceutical companies were fined by the Korea Fair Trade Commission ("KFTC") for providing travel, entertainment and gifts to medical professionals with the objective of increasing prescriptions. Novartis Korea paid a penalty of just over $2 million to resolve the KFTC action. However, in the aftermath of the KFTC’s industry sweep, Korea introduced a "two-strike rule" intended to combat bribery in the health care sector: For a first violation, the South Korean Ministry of Health and Welfare ("MOHW") can delist a company’s product from state reimbursement for up to one year, while a second violation can lead to permanent delisting. Per last week’s announcement, MOHW has decided to suspend various formulations of Novartis’ Alzheimer’s Disease treatment Exelon and its chemotherapy drug Zometa for three months. The Ministry will continue to reimburse the company’s other products, and it will announce its final decision on the penalty in May. In a parallel proceeding, the Korean Ministry of Food and Drug Safety had announced smaller fines and a similar three-month suspension of Exelon in March 2017. Media reports at the time suggested that the Korean government had responded to patient lobbying efforts to limit the number of suspended products, as adequate alternatives to some Novartis products did not exist in the Korean market. [...]
(#7 of 7) Novartis Misconduct in Turkey
Exclusive: Novartis investigating $85 million bribery allegations in Turkey
LONDON (Reuters) — An anonymous whistleblower has accused Swiss drugmaker Novartis (NOVN.S) of paying bribes in Turkey through a consulting firm to secure business advantages worth an estimated $85 million, according to a Feb. 17 email seen by Reuters.
The alleged benefits, which Novartis confirmed it was investigating, included getting medicines added to lists, or formularies, of drugs approved for prescription in government-run hospitals, and avoiding price cuts in other countries by securing government approval to change the names of two drugs.
The anonymous sender’s 5,000-word email to Novartis Chief Executive Joe Jimenez and Srikant Datar, chairman of its audit and compliance committee, said Novartis had paid Alp Aydin Consultancy the equivalent of $290,000 plus costs during 2013 and 2014, before the Turkish Social Security Institution (SSI) launched an investigation, leading the drugmaker to end the association. [...]
The whistleblower email said Novartis had gained $20 million from Aydin’s ability to have new drugs for multiple sclerosis, chronic lung disease and juvenile arthritis added to hospital formularies.
It also benefited from advantageous pricing decisions and a special import permit for a drug with an expired manufacturing certificate, the email said.
The biggest gain of $50 million, according to the whistleblower’s email, came from Turkish officials allowing Novartis to rename its drugs Ilaris and Gilenya as Ibecta and Fingya. This meant they dropped out of international pricing comparisons, since such cross-referencing is based on commercial names. [...]