SDNY Denies Novartis’ Motion to Dismiss Kickback Lawsuit Under False Claims Act

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Young Law Group announces court decision in a qui tam lawsuit alleging payments to doctors for sham speaker programs against Novartis on the day of the first public release by the Government of payment data from pharmaceutical companies to doctors under the Physician Payments Sunshine Act.

Young Law Group, P.C.

Young Law Group, P.C.

Close ties between drug manufacturers and doctors can lead to treatment decisions made based on financial benefits rather than sound science

On September 30, 2014, U.S. District Court Judge Paul G. Gardephe denied Novartis’ Motion to Dismiss the U.S. Government’s allegations that the company's cardiovascular division violated the Federal and New York Anti-Kickback Statutes. The False Claims Act lawsuit, captioned as U.S. ex rel. Bilotta v. Novartis Pharmaceuticals Corp., Case No. 1:11-cv-00071-PGG, is in the U.S. District Court for the Southern District of New York.

The U.S. Government’s Complaint alleges that Novartis used “sham” speaker events to induce doctors to prescribe its cardiovascular drugs, including Lotrel, Diovan and Exforge. Novartis is accused of holding thousands of speaker events where attendees spent little or no time discussing the drugs at the program, with few or no slides shown. Additionally, the company allegedly paid a number of doctors, acting as its speakers, to give the same presentation to the same group of doctors over a short period of time. Events were also held at inappropriate locations, including Hooters restaurants, high-end establishments and, on two occasions, during fishing trips.

Novartis entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Service Inspector General’s Office in 2010 after the settlement of a previous lawsuit brought under the False Claims Act. Novartis is accused of paying kickbacks to doctors for drugs not disclosed to the Government during the 2010 settlement negotiations, as well as for kickbacks in drugs named in the settlement.

The qui tam lawsuit was initially filed in 2011 by relator Oswald Bilotta, a former Novartis sales representative. Bilotta is represented by James E. Miller, Esquire, of Shepherd, Finkelman, Miller, and Shah, LLP and Eric L. Young, Esquire, of Young Law Group.

The Department of Justice partially intervened in the case on April 26, 2013, and filed a Complaint-in-Intervention alleging violations of the Anti-Kickback Statute. New York State has also intervened in the lawsuit.

Novartis moved to dismiss the Complaint’s allegations on the grounds that fraud was not pled with sufficient particularity under Federal Rule of Civil Procedure 9(b). The Court granted Novartis' Motion to Dismiss claims related to off-label marketing.

The decision comes at an historic time. Also on September 30, 2014, the Centers for Medicare and Medicaid Services released data on certain payments made during five months of 2013 to physicians and teaching hospitals by manufacturers of drugs, medical devices and biologicals. * The information was disclosed pursuant to the Affordable Care Act, which was signed into law by President Obama in 2010. The payment data disclosure provisions were first introduced into Congress by Senators Chuck Grassley and Herb Kohl in 2007 as the Physician Payments Sunshine Act.

“Patients have unprecedented access to information about their treatment options today,” said Eric L. Young. “The Sunshine Act takes a crucial step forward. It gives patients access to information about the doctor who helps them evaluate these options. Patients should be able to judge for themselves whether a physician’s opinion has been influenced due to his or her ties to pharmaceutical and medical device companies.”

According to the Chicago Tribune on September 30, 2014, drug and medical-device companies paid at least $3.5 billion to U.S. physicians during the final five months of last year. *

“Close ties between drug manufacturers and doctors can lead to treatment decisions made based on financial benefits rather than sound science,” stated James E. Miller. “The Anti-Kickback Statute is one tool in the Government's arsenal to prevent physicians and pharmaceutical companies from crossing the line. Today's decision was the result of a substantial team effort with the U.S. Department of Justice, the New York State Attorney General’s Office, relator Oswald Bilotta and co-counsel, all of whom deserve credit for bringing the conduct of the Novartis cardiovascular division to light.”

The federal Anti-Kickback Statute makes it illegal to pay any remuneration to a person to induce that person to purchase or recommend a drug covered by a federal health care program. The law provides safe harbors to protect business practices identified by the Government as containing a low risk of corruption.

The False Claims Act was passed by Congress in 1863 to authorize private individuals, known as relators, to bring a qui tam lawsuit on behalf of the federal government to recover money lost due to fraud. Since 1986, the United States has recovered $42 billion in taxpayer funds because of the False Claims Act. ** Eligible whistleblowers are entitled to between 15 and 25 percent of the recovery when the United States intervenes. ***

Shepherd, Finkelman, Miller & Shah, LLP represents clients, including business entities, consumers, individual and institutional investors, fiduciaries, state and other governmental entities, and whistleblowers, in complex litigation and other matters with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin and internationally.

Young Law Group represents whistleblowers located throughout the United States and internationally in qui tam lawsuits brought under the False Claims Act. Eric L. Young, Esquire, Managing Partner of Young Law Group, represented the first whistleblower awarded compensation by the Internal Revenue Service under the mandatory reward program created following the Tax Relief and Health Care Act of 2006. Young has also served as an expert witness in areas of U.S. whistleblower law and represented clients in some of the largest qui tam recoveries.

For additional information, contact:
Eric L. Young
Young Law Group
123 S. Broad St. Ste 2250
Philadelphia, PA 19109
(215) 367-5151

** Business Week, August 08, 2014, http://www.businessweek.com/articles/2014-08-04/whistle-blower-protection-sen-dot-grassley-takes-on-big-business

*** Pittsburgh Post-Gazette, February 23, 2014, http://www.post-gazette.com/business/2014/02/23/Under-False-Claims-Act-whistleblowers-get-their-share-of-billions/stories/201402230084

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