Novartis pleads guilty, will pay $422.5 million to settle off-label and kickback allegations

by Ben Vernia | September 30th, 2010

Right on schedule to end the fiscal year, DOJ announced on September 30 that Novartis Pharmaceuticals Corp. has agreed to plead guilty to a misdemeanor and pay criminal and civil fines and damages. According to DOJ’s press release:

According to the agreement reached with the government, the East Hanover, N.J.-based company will plead guilty to a misdemeanor and pay a $185 million combined criminal fine and forfeiture for the off-label promotion of Trileptal in violation of the Food, Drug and Cosmetic Act. The Food and Drug Administration (FDA) approved Trileptal as an anti-epileptic drug, for the treatment of partial seizures, but not for any psychiatric, pain or other uses. Once a pharmaceutical is approved by the FDA, a manufacturer may not market or promote it for any use not specified in its new drug application. The unauthorized uses are also known as “unapproved” or “off-label” uses.

In addition to the criminal fine and forfeiture, Novartis has agreed to pay $237.5 million to resolve civil allegations under the False Claims Act that the company unlawfully marketed Trileptal and five other drugs, and thereby caused false claims to be submitted to government health care programs. Specifically, the civil settlement resolves allegations that Novartis illegally promoted Trileptal for a variety of uses, including psychiatric and pain uses, which were not medically accepted indications and therefore not covered by those programs. In addition, the agreement resolves allegations that the company paid kickbacks to health care professionals to induce them to prescribe Trileptal and five other drugs, Diovan, Zelnorm, Sandostatin, Exforge and Tekturna. The federal share of the civil settlement is $149,241,306, and the state Medicaid share of the civil settlement is $88,258,694.

The case arose from four separate qui tam suits brought by former employees, who will share in a $25 million reward (a 16.8% relators’ share).

The government also announced that the company has entered into a five-year Corporate Integrity Agreement with the Office of Inspector General of HHS.

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