* Second civil fraud lawsuit by U.S. in four days
* U.S. says Novartis sought to boost sales of drugs
* Dinners held at pricey Chicago, D.C. restaurants
* Novartis disputes claims, says will defend itself
By Jonathan Stempel
NEW YORK, April 26 The U.S. government on Friday
announced its second civil fraud lawsuit against Novartis AG
in four days, accusing a unit of the Swiss drugmaker
of paying multimillion-dollar kickbacks to doctors in exchange
for prescribing its drugs.
Authorities said the Basel-based company for a decade
lavished healthy speaking fees and "opulent" meals, including a
nearly $10,000 dinner for three at the Japanese restaurant,
Nobu, to induce doctors to prescribe its drugs.
They said this led to the Medicare and Medicaid programs
paying millions of dollars in reimbursements based on
kickback-tainted claims for medication such as hypertension
drugs Lotrel and Valturna and the diabetes drug Starlix.
The charges are detailed in a whistleblower lawsuit first
filed against Novartis Pharmaceuticals Corp by a former sales
representative in January 2011 and which the U.S. government has
Twenty-seven U.S. states, the District of Columbia and the
cities of New York and Chicago are also plaintiffs in the
lawsuit, which seeks triple damages under the federal False
"Novartis corrupted the prescription drug dispensing
process," U.S. Attorney Preet Bharara in Manhattan said in a
statement. "For its investment, Novartis reaped dramatically
increased profits on these drugs, and Medicare, Medicaid, and
other federal healthcare programs were left holding the bag."
On Tuesday, the government accused Novartis of inducing
pharmacies to switch thousands of kidney transplant patients to
its immunosuppressant drug Myfortic in exchange for kickbacks
disguised as rebates and discounts.
Novartis spokeswoman Julie Masow said the company disputes
the claims in both lawsuits and will defend itself. She also
said physician speaker programs are "an accepted and customary
practice" in the industry.
People who file whistleblower lawsuits, sometimes known as
"qui tam" lawsuits, on behalf of the government under the False
Claims Act share in recovered damages.
The United States does not participate in all such lawsuits,
but often joins cases it believes have greater merit.
The original lawsuit against East Hanover, New Jersey-based
Novartis Pharmaceuticals was filed by Oswald Bilotta, who now
lives in North Carolina. He did not immediately respond to a
request for comment.
"We believe that Novartis' alleged payment of kickbacks is
yet another example of abuse in the pharmaceutical industry that
contributes to skyrocketing medical costs," James Miller, a
partner at Shepherd, Finkelman, Miller, and Shah in Chester,
Connecticut representing Bilotta, said in a statement.
A $9,750 DINNER
According to the complaint, from January 2002 to November
2011, Novartis often paid doctors to speak about its drugs and
programs that were supposed to have educational purposes, but
which in reality were often social occasions or not held at all.
Authorities said that for Lotrel, Valturna and Starlix
alone, the company spent nearly $65 million and conducted more
than 38,000 speaker programs over the decade.
The complaint describes a variety of alleged improper
programs, including seven at Hooters restaurants that Novartis
sales representatives attended, and pricey meals to which
Novartis allegedly treated doctors.
Among these meals were dinners at high-end Chicago
restaurants such as Japonais and L20, a $2,016 dinner for three
at Smith & Wollensky in Washington, D.C. and the $9,750 dinner
for three at Nobu in Dallas in December 2005.
Satow, the Novartis spokeswoman, said speaker programs are
"promotional programs" designed to inform physicians how to use
the company's medicines.
Novartis "invests significant time and resources to help
ensure these programs are conducted in an ethical and
responsible manner," she said. "We are dedicated to doing it
Bilotta filed his lawsuit four months after Novartis in
September 2010 agreed to pay $422.5 million to resolve criminal
and civil liability over its marketing of several drugs,
including the epilepsy drug Trileptal.
The case is U.S. ex rel. Bilotta v. Novartis Pharmaceuticals
Corp, U.S. District Court, Southern District of New York, No.