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NOVARTIS: Federal Prosecutors Rein in Kickbacks to Doctors

Tuesday, Apr. 30, 2013

Novartis Pharmaceuticals is once again under scrutiny from federal prosecutors over its educational speaking programs, which prosecutors allege are nothing more than kickbacks to doctors for prescribing their products. Prosecutors allege that Novartis’ U.S. business unit essentially bribed doctors in the form of lavish dinners, fishing trips, and speaking fees between $750 and $1500, all under the guise of educational programs. It has been a long-standing practice for drug companies to pay doctors to educate other doctors about new prescriptions, but regulators have struggled to define when payments to doctors for educational purposes become bribery. Are payments by pharmaceutical firms to doctors for educational purposes legitimate?

  Kirk: I am happy this lawsuit will finally disrupt what has been “business as usual.” Pharmaceutical and medical device firms have long “bribed” doctors to prescribe the firm’s products. Novartis’ payments, if accurately described, clearly cross the line into bribery. The cost to society is huge as health care costs escalate to cover the payments. Coming disclosures of payments under health care reform will dampen the payments. This lawsuit should help too.

  Patrick: It is clear that Novartis took substantial liberties with its “educational programs.” At the same time, Novartis’ claims that such practices are “accepted and customary practice in the industry,” do bear some weight despite not absolving them of wrongdoing. The source of the controversy is the ambiguity between money for educational purposes and bribery for prescribing a firm’s drugs. Let’s face it; companies will continue to use the grey area to their advantage until regulators set clear standards.

U.S. Sues Novartis Again, Accusing It of Kickbacks

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Comments Comments

Joe Schmid said on May 2, 2013
When the legal fence line (aka kickbacks and bribes) and the ethical fence line (rebates, honoraria, training) get to the point where there is very little light between them, cases like this are bound to happen regardless of industry. Novartis pleaded guilty to a similar charge in 2005; and signed a Corporate Integrity Agreement and a large fine as part of the settlement. These agreements typically run for 5-years, put in place a compliance officer and committee, developing written standards and policies with all-inclusive training, and independent annual audit and review. Norvartis has in place a model Code of Conduct and supporting system and infrastructure, so it is no surprise they are disputing the claims. Norvartis isn't an anecdotal player in the phrama industry and has a lot at stake. What will be interesting as the case plays out is whether this is an issue of a rogue salesperson or regional / country manager, or exactly how far up the corporate ladder this goes. Of equal interest is the ethics of the doctors involved in these allegations. It takes two to tango. If medical treatment decisions are driven by fishing trips and dinners, that's scary. - Like - 1 person likes this.
Patrick said on May 2, 2013
Thanks for the post, Joe. I agree, the line between kickbacks and rebates is just about indistinguishable. I'm interested to see how far up the ladder it goes as well. The below quote came out from a review given from a district manager to a sales rep in 2007, suggesting it's at least accepted (even forced) in that district. "I am disappointed that you did not utilize your entire speaker funds again. In 2008, if your territory is not at 100% of speaker fund utilization, you will be put on a coaching plan immediately." - Like
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