U.S. Seeks $3.3 Billion From Novartis in Drug Kickback Suit

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The U.S. is seeking as much as $3.3 billion from Novartis AG in a suit claiming the company paid kickbacks to increase sales of two prescription drugs.

The government claims a group of specialty pharmacies submitted thousands of fraud-tainted reimbursement claims to Medicare and Medicaid for the two drugs, Exjade and Myfortic. It’s seeking damages and civil fines against the drugmaker in a case set to be tried in New York in November. The U.S. disclosed the amount of its demand in a court filing Monday.

The U.S. claims Novartis referred patients to the specialty pharmacies and paid kickbacks in the form of rebates to get the pharmacies to recommend the drugs to patients and to increase sales. The scheme violated the False Claims Act and Anti-Kickback Statute, according to the government.

The suit was filed in 2012 as a whistle-blower claim by David Kester, a former Novartis employee. The U.S. is joined in the claims involving Exjade by 11 states that intervened in the suit. It’s seeking as much as $11,000 in fines for each of 161,011 Exjade and Myfortic claims submitted by the pharmacies to the government health care programs. It’s also seeking triple damages based on the $507.5 million they received in reimbursements.

Novartis, based in Basel, Switzerland, said in the court filing that it provided legitimate rebates to the pharmacies. The company denies violating any laws in its sale of Exjade, which removes excess iron from the blood of patients who receive blood transfusions, and Myfortic, which is given to prevent rejection of kidney transplants.

The company “continues to dispute the allegations and is continuing to defend itself in this litigation,” Novartis said in an e-mailed statement on Wednesday. “We look forward to a full presentation of all of the evidence during the trial.”

Novartis shares fell 0.3 percent to 91.90 Swiss francs as of 9:17 a.m. in Zurich. The Swiss Market Index rose 0.6 percent.

The case is U.S. v. Novartis Pharmaceuticals Corp., 11-cv-08196, U.S. District Court, Southern District of New York (Manhattan).

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