Kickbacks Crackdown Worldwide: Will Pharma Finally Get the Message?

The Wall Street Journal recently reported that six employees of Novartis have been indicted in South Korea amidst allegations that the company paid $2.3 million to physicians in order that they prescribe the company’s drugs. Although the company said, “Novartis does not tolerate misconduct and we are already implementing a remediation plan in Korea based on the findings from our own investigation,” this is not the first time that Novartis has run head on into allegations about kickbacks.

Our law firm has certainly tangled with Novartis before.  In 2010, Novartis Pharmaceuticals Corporation paid $237.5 million to resolve civil allegations that it unlawfully promoted its drug Trileptal for unapproved uses and that it paid illegal remuneration to healthcare providers to induce them to prescribe the company’s products. At the same time, the company paid a $185 million criminal fine and plead guilty to a misdemeanor charge of introducing misbranded drugs into interstate commerce. Nolan Auerbach & White represented three of the key whistleblowers in these cases, which were brought under the qui tam, or whistleblower, provisions of the False Claims Act. This settlement also resolved two other qui tam actions raising similar allegations

Kickbacks have long been viewed in the United States as a violation of the False Claims Act and under certain circumstances, subject to criminal penalties.  The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), prohibits any person or entity from making or accepting payment to induce or reward any person for referring, recommending or arranging for the purchase of any item for which payment may be made under a federally-funded health care program. The statute not only prohibits outright bribes, but also prohibits offering inducements or remuneration that has as one of its purposes the inducement of a health care provider to refer patients for services that will be reimbursed by a federal healthcare program. Illegal remuneration includes bribes and rebates, gifts, above- or below-market rent or lease arrangements, discounts, supplying services or equipment for free or at above- or below-market rates, cash or in kind, whether they are paid directly or indirectly.

More information for whistleblowers is located at the Nolan Auerbach & White website.