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Novartis AG SHALL face DOJ Complaint..

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Posted on April 02 2019


I don’t know about you, but in the Spring of 2018 when it was revealed that Trump’s former fixer had a multi-million dollar payday, I was a bit perplexed. And yes, as I’ve previously disclosed in late March into mid April of 2018 I was some what supportive of Avenatti’s approach. But the more I researched him, my concerns grew to a critical mass by late May 2018 I decided to disengage and not amplify him, at all.


Notwithstanding when Avenatti released his “executive summary” I had and still have concerns about how he came in to possession of the Financial Information linked to Cohen and various Companies that paid him millions in “lobbying fees”.

Novartis was one such company. This archived May 2018 Twitter Thread will help establish a predicate for this follow up entry.


March 2013 - Novartis Docs & Kickbacks


This 2013 ProPublica Article is worth (re)reading. It’s phenomenal investigative reporting of how deeply rooted Notvartis AG’s along with nearly a dozen and half of big Pharma paid nearly  $2,000,000,000,000.00 in what was coined as a multi-year bribe scheme. ProPublica launched their Dollar for Docs in 2010 (found here) This groundbreaking investigative journalism, sought to explain how deep Big Pharma’s tentacles are. These reported worked to further explain how Novartis used their “speaking bureau” to pay Doctors hundreds of thousands of dollars, $10K per plate dinners, luxury travel and other extravagant largesse.

Within weeks of the aforementioned ProPublica Article the Department of Justice hit Norvartis with a civil complaint and subsequent criminal fines.



Norvartis  v DOJ 2010 to 2015:

As a precursor to this week’s Court Order you should know a bit of Novartis history with our Government Agencies, HHS, HHS-OIG, DOJ, FDA, CDC and SEC it is long and somewhat complicated. For example in 2010 Novartis entered into a Coperate Integrity Agreement (CIA found here)


Novartis Pharmaceuticals Corporation hereby enters into this Corporate Integrity Agreement (CIA) with the Office ofInspector General (OIG) of the United States Department of Health and Human Services (HHS) to promote compliance with the statutes, regulations, and written directives of Medicare, Medicaid, and all other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health care program requirements) and with the statutes, regulations, and written directives of the Food and Drug Administration (FDA requirements). Novartis Pharmaceuticals Corporation shall be referred to as "Novartis."



The aforementioned CIA, was in addition to the September 2010 $422.5 million settlement


Novartis Pharmaceuticals Corporation has agreed to pay $422.5 million to resolve criminal and civil liability arising from the illegal marketing of certain pharmaceutical products, the Justice Department announced today.

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.



Shortly thereafter Novartis agreed to a second settlement:


for $72.5 million, involved the cystic fibrosis drug TOBI, which Novartis and its predecessor, Chiron Corporation, allegedly marketed for off-label use. The settlement, which included $43.5 million recovered for federal programs and $29 million recovered for state Medicaid programs, resolved a qui tam lawsuit in which the relators received $7.8 million.


After a multi-Agency investigation, in November of 2015, the DOJ, specifically then SDNY-AUSA Preet Bharara announced a $370million fraud settlement with Norvartis’ connection with distributing the “iron chelation drug Exjade through the Exjade Patient Assistance and Support Services network and distributing the immunosuppressant drug Myfortic through certain specialty pharmacies”

Norvartis November 2015 Stipulation Found here  

Norvatis November 2015 Admission, Found here.


April 2013, the Government first intervened as to NOVARTIS in this lawsuit, which was initially filed by a whistleblower, and asserted that NOVARTIS violated the False Claims Act and the Anti-Kickback Statute, 42 U.S.C. § 1370a-7b, by giving kickbacks to specialty pharmacies in return for recommending Exjade, an iron chelation drug, and Myfortic, an anti-rejection drug for kidney transplant recipients.  With respect to Exjade, the Government alleged that NOVARTIS gave kickbacks in the form of patient referrals and rebates to Bioscrip and Accredo to induce those pharmacies to recommend Exjade refills.


The settlement further obligated Novartis

NOVARTIS agrees to (i) pay $370,000,000 to resolve the federal and state false claims act claims, (ii) forfeit $20 million as proceeds from the scheme under the federal civil forfeiture statute, (iii) make extensive admissions concerning its relationship with specialty pharmacies, and (iv) amend its corporate integrity agreement with HHS-OIG to subject NOVARTIS’s specialty pharmacy relationships to independent review and extend the term of that agreement by five years.  Of the $370 million, $286,870,245.98 will be paid to the Government, and $83,129,754.02 will be paid to settling states.


Shortly thereafter Novartis agreed to a second settlement:

for $72.5 million, involved the cystic fibrosis drug TOBI, which Novartis and its predecessor, Chiron Corporation, allegedly marketed for off-label use. The settlement, which included $43.5 million recovered for federal programs and $29 million recovered for state Medicaid programs, resolved a qui tam lawsuit in which the relators received $7.8 million.


2017 BioServices Inc:

As a follow up to the original Norvartis Kick-Back any bribery scheme, the Justice Department announced a $13.4 million settlement with US Bioservices Corp, you can read the full settlement terms and conditions, here:


settled a civil fraud case against US BIOSERVICES CORP. (“US BIO”)pursuant to which US BIO will pay a total of $13.4 million. The settlement resolves claims that US BIO violated the Anti-Kickback Statute and the False Claims Act by participating in a kickback scheme with NOVARTIS PHARMACEUTICALS CORP. (“NOVARTIS”) relating to the NOVARTIS drug Exjade. Specifically, the United States’ Complaint alleges that US BIO and NOVARTIS entered into a kickback arrangement pursuant to which US BIO was promised additional patient referrals and related benefits in return for refilling a higher percentage of Exjade than the two other pharmacies that also dispensed Exjade. The settlement will also resolve numerous state law civil fraud claims.



SEC 2016 Novartis $25M to settle FCPA:

After an exhaustive investigation, the SEC determined that two employees of China-based Novartis and it’s subsidiaries engaged in a multi-year scheme, where they gave money, gifts, and other things of value to various doctors and healthcare providers. This bribery scheme, enabled Novartis AG to generate million dollars in sales of their pharmaceutical products into China’s state-run health institutions.

As detailed on page 2, Section III, paragraph 2, which reads in part:


include improperly recording the payments as legitimate expenses for travel and entertainment, conferences, lecture fees, marketing events, educational seminars, and medical studies. Novartis also failed to devise and maintain an effective system of internal accounting controls or an effective anti-corruption compliance program.


SEC File No. 3-17177 (found here

Norvartis AG has agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) when its China-based subsidiaries engaged in pay-to-prescribe schemes to increase sales. You really need to read page 4. Norvartis gave “pocket” or “walking around money...and paid for charges Doctors racked up at strip clubs:


Sandoz China also paid for travel to the U.S. for spouses of the HCPs, $150 in "pocket" or "walking around" money, and cover charges at a strip club.


In the 2016 Norvartis China-subsidiary FCPA matter:

Novartis consented to the order without admitting or denying the findings, and agreed to pay $21.5 million in disgorgement of profits plus $1.5 million in prejudgment interest and a $2 million penalty. Novartis also agreed to provide status reports to the SEC for the next two years on its remediation and implementation of anti-corruption compliance measures.



Stemming from the 2011 case No: 1:11-cv-00071, on March 31, 2019 (released on) April 1, 2019 US Federal District Judge (SDNY) Ruled that Norvartis shall stand trial and denied Novartis AG’s petition to for summary judgment.

The Plaintiffs position is that settlement agreements notwithstanding Norvartis AG engaged in a decades long “kickback scheme” that monetarily incentivized doctors to write more prescriptions and paid them to write those prescriptions. In violation of  False Claims Act, 31 USC §3730(b)(2) and violations of the Anti-Kickback Act, 42 USC §1320a-7b(b)

Norvartis arguments essentially boil down to the previous 2010 settlement agreements and that the Government is (in layman’s terms) playing a switch and bait and the Government does not have the authority to charge the Ts & Cs of the 2010 Settlement Agreement. Insofar as to petition the Court to render a summary judgement on the previously mentioned claims but also enter a determination by the Government of Novartis’ “new category of allegedly fraudulent programs” that Novartis calls “lunch and learn” 


The Court held that the Government had sufficiently proved enough evidence of Norvartis “company-wide kickback scheme,”. The Court further held that the government need not provide evidence of provide proof of a “quid pro quo between physicians and Novartis,” for Novartis to stand trial for their violations of the aforementioned kick-back & false claims act(s).



This open source link will take you to the 3 page order. The Judge hasn’t released his Memorandum of Law, when he does I’ll update this entry but my gut says that will be an incredibly long document and it will likely contain an incomprehensible about of authorities. 

If reading hundreds of pages of numerous legal filings isn’t your cup of tea, this video might be worth watching, it explains the 2011 Norvartis Whistleblower Complaint, the US Government Filing and just how insidious Norvartis conduct has been. It’s definitely a perfect case study in why whistleblowers are important and how a Government can do the right and just thing to protect her citizenry writ large.


Also not that this matters but this is currently featured on Norvartis “Corporate” profile, found here.

And finally I would also keep any eye on South Korea, given on April 27, 2018 the South Korean Government fined Norvartis  $48.3 million for the same kick-back scheme where Novartis also paid Korean doctors kickbacks to prescribe various Norvartis drugs. Also after that fine, the South Korean Ministry of Health and Welfare issued a preliminary decision to “suspend insurance coverage for six month on some Novartis drugs”...-SpicyFiles Out

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