It took up the tab of Daniel and Peter Luger, but the incentives for doctors did not end with the New York restaurants.
There were fishing junkets, golf excursions and roundtable events at Hooters. And then there were six-digit fees paid by Novartis Pharmaceutical Corp. paid to several doctors who wrote thousands of prescriptions for heart and diabetes drugs that the company made.
Now, after acknowledging that it used a comprehensive kickback program for nearly a decade to influence doctors to prescribe certain medications, Novartis will pay $ 678 million to resolve a fraud case, New York federal prosecutors announced Wednesday.
Prosecutors said Novartis violated a federal statute that banned kickbacks, leading to fraudulent prescription claims paid by Medicare, Medicaid and the U.S. Department of Veterans Affairs. The company gained an advantage over its competitors, but there were no accusations that the drugs were not needed by the patients they were prescribed, prosecutors say.
“For more than a decade, Novartis spent hundreds of millions of dollars on so-called speaker programs, including voice fees, exorbitant meals and alcohol on the top shelf that were just bribes to get doctors across the country to prescribe Novartis drugs,” Audrey Strauss, the acting U.S. attorney for Manhattan, said in a statement. “Giving these cash payments and other lavish goodies affects doctors’ duty to choose the best treatment for their patients and increases drug costs for everyone.”
The settlement ended a lawsuit filed in 2011 by a former sales representative for Novartis, which the federal government joined in 2013. It was not the first time Novartis was accused of giving doctors kickbacks. The company decided another lawsuit in 2010.
Representatives from Novartis said on Wednesday that the company had undergone a transformation and had agreed on new corporate integrity obligations in the United States by 2025. They said Novartis moved away from the traditional speaker program model that had drawn the federal government’s scrutiny.
“Today’s settlements are in line with Novarti’s commitment to solving and learning from heritage compliance issues,” Dr. Vasant Narasimhan, the company’s CEO, in a statement. “We are a different company today – with new leadership, a stronger culture and a wider commitment to ethics embedded in our company. I have been clear that I never want us to achieve commercial success at the expense of our values - our values must always come first and are the foundation of everything we do. “
Prosecutors said the company, which is part of Swiss drug manufacturer Novartis AG, expedited healthcare professionals with cash, meals, alcohol, hotels, travel and entertainment as part of a spam program it ran from 2002 to 2011.
The doctors were often not obliged to make presentations at the so-called speaking engagements, for which they received a fee, according to the settlement. There were “minimal” discussions about medicine at the events.
One doctor, who wrote more than 8,000 prescriptions for Novartis drugs, received $ 320,000 in fees, according to the settlement, which did not name the doctor. Another doctor who wrote 9,000 prescriptions received $ 220,000 in honorariums, and a third doctor who wrote 3,600 prescriptions received more than $ 200,000.
“Not only did incarcerated Novartis physicians host these speaking events, the reps cut down on doctors to write more prescriptions for the company’s drugs to give Novartis an advantage over competitors in their field,” William F. Sweeney Jr., assistant director of the FBI, said ‘s field office in New York, in a statement. “Greed replaced the responsibility that the public expects from those who practice medicine, not to mention the potential for erosion of confidence in the pharmaceutical industry as a whole. This behavior was reprehensible and dishonest. “