For Immediate Release
Media Contact: Kriss Bivens Cloyd
(208) 334-4119

Date: December 4, 2015

Novartis Pharmaceuticals Corporation Settles with States Over Kickbacks

(Boise) – Attorney General Lawrence Wasden says Idaho will receive $52,342 as part of an agreement in principle to settle kickback claims against Novartis Pharmaceuticals Corporation.

The settlement will resolve allegations that Novartis provided kickbacks to certain specialty pharmacies in exchange for recommending the drug Exjade to Medicaid and Medicare patients. Under the settlement, Novartis has agreed to pay $390 million to the United States and more than forty states.

The settlement stems from a whistleblower lawsuit which was filed in the United States District Court for the Southern District of New York. Two of the specialty pharmacies named as defendants in the case, BioScrip, Inc. and Accredo Health Group, Inc., have already agreed to pay $15 million and $60 million, respectively, to resolve claims that they accepted kickbacks from Novartis to promote Exjade.

Novartis, which is headquartered in East Hanover, New Jersey, is a subsidiary of the Swiss pharmaceutical company Novartis AG. In late 2005, Exjade was approved by the U.S. Food and Drug Administration ("FDA") for the treatment of chronic iron overload due to blood transfusions. After launching the drug, Novartis marketed Exjade as a treatment for patients with a variety of underlying conditions that affect blood cells or bone marrow, including beta-thalassemia, sickle cell disease, and myelodysplastic syndromes.

The settlement resolves allegations that between 2007 and 2012 Novartis paid kickbacks to three specialty pharmacies – BioScrip, Accredo, and US Bioservices. The pharmacies were selected by Novartis to be part of a closed-distribution network through which most Exjade prescriptions in the United States were filled. Novartis created the distribution network, which it called EPASS, and therefore had significant control over how many patient referrals each pharmacy received. The pharmacies shipped most Exjade prescriptions to patients by mail and were supposed to call patients to set up the shipments and obtain consent for refills. The pharmacies billed themselves as specialty pharmacies that could arrange for these shipments and run educational programs for patients.

In their court filings, the government plaintiffs alleged that Novartis paid kickbacks to the pharmacies to corrupt the interactions with patients by inducing the pharmacies to exaggerate the dangers of not taking Exjade, emphasize Exjade's benefits, and downplay the severity of Exjade's side effects. The scheme began after Exjade failed to meet Novartis' internal sales goals and refill rates for Exjade were lower than anticipated.

The settlement also resolved allegations that Novartis paid kickbacks to other specialty pharmacies to promote the drug Myfortic to doctors. Myfortic is an immunosuppressant that is approved for use in kidney transplant patients.

The state settlements were negotiated by a team of states representatives.

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