Novartis Named in False Claims Act Suit Alleging Kickback Scheme

May 9, 2013 — It is a violation of the False Claims Act to bill federal healthcare programs for medications prescribed or sold as part of an illegal kickback scheme. Medicare fraud hurts taxpayers and it hurts drug maker employees as well. Kickback scams require pharmaceutical sales reps and pharmacy workers to participate in fraudulent schemes or to look the other way. Honest employees who are trying to support their families should not be faced with that choice.

To encourage drug maker insiders and pharmacy employees to notify the government, the qui tam language in the False Claims Act authorizes an informant to bring a lawsuit on the government’s behalf and then retain a share of any monies collected as a result.

Paying Illegal Kickbacks is Medicare Fraud

The United States has filed a False Claims Act suit against Novartis AG, alleging that the Swiss pharmaceutical company caused tens of millions of Medicare and Medicaid reimbursements to be paid on fraudulent claims that were part of an illegal kickback scheme. Since 2005, the government has alleged, Novartis persuaded 20 or more pharmacies to switch medications for thousands of kidney transplant recipients to Novartis’ immunosuppressant Myfortic from competitors’ drugs — all in return for kickbacks masquerading as discounts or rebates.

A pharmacist in Los Angeles allegedly received a “bonus” rebate of five percent of the pharmacy’s annual Myfortic sales, amounting to several hundred thousand dollars.

An Arkansas pharmacy responded to the bonus program by increasing its yearly sales of Myfortic to $1 million from $100,000 in a four-year period.

A federal anti-kickback statute makes it a crime to pay people to purchase pharmaceuticals that are reimbursed by federal healthcare programs such as Medicare and Medicaid. But according to the False Claims Act suit, a Novartis account manager concedes that the kickback scheme generates considerable revenue for the company. The U.S. claims that Novartis has essentially turned purportedly independent pharmacists into company salespeople.

The Chicago Tribune reports that Myfortic net sales are up twelve percent from the previous year.

Employee Insiders Use False Claims Act to Stop Illegal Kickbacks

Drug maker insiders are well situated to discover illegal kickback schemes and file a False Claims Act lawsuit. So are employees of the pharmacies involved. Before notifying the government, collaborators should learn their rights. The whistleblower lawyers at Waters & Kraus provide tipsters with the skilled representation they need. Contact us by email or call our qui tam lawyers at 855.784.0268 to discuss how we can work together with insiders in the pharmaceutical industry to combat fraud.

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