[Ip-health] Reuters: Drugmakers' deals with pharmacies come under scrutiny

Thirukumaran Balasubramaniam thiru at keionline.org
Thu Apr 25 03:44:10 PDT 2013


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In the Novartis complaint, U.S. Attorney Preet Bharara said the alleged scheme had been highly lucrative for Novartis, resulting in "rapid, sometimes exponential growth in Myfortic sales." In one alleged example, Novartis offered a Los Angeles pharmacist a "bonus" rebate of 5 percent of the pharmacist's annual Myfortic sales, or several hundred thousand dollars, to switch as many as 1,000 patients to Myfortic.

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Drugmakers' deals with pharmacies come under scrutiny
4/25/2013COMMENTS (0)

By Terry Baynes

NEW YORK (Reuters) - The fraud suit filed against Novartis AG by federal prosecutors on Tuesday underscores the government's growing scrutiny of deals between drug companies and pharmacies, said lawyers who handle False Claims Act cases.

The civil fraud lawsuit, filed in the Southern District of New York, said Novartis Pharmaceuticals Corp had induced at least 20 pharmacies since 2005 to switch thousands of kidney transplant patients to its immunosuppressant drug Myfortic from competitors' drugs. In exchange, the pharmacies received kickbacks disguised as rebates and discounts, according to the lawsuit.

The action comes on the heels of a settlement in which Amgen Inc agreed to pay $24.9 million to settle allegations by the government and a whistle-blower that it provided kickbacks in the form of performance-based rebates to long-term care pharmacy providers. The deal, announced on April 16, settled claims the drugmaker had enticed pharmacies to use its Aranesp anemia drug instead of rival medicines.

"It's the wave of the future," said Reuben Guttman, a lawyer at Grant & Eisenhofer representing whistle-blower Frank Kurnik who brought the original case against Amgen. The Department of Justice formally joined the case on the same day it settled.

In the past, False Claims Act cases tended to focus on efforts by drug companies to convince individual doctors to prescribe their drugs. The latest suits, however, center on alleged payments by drugmakers to pharmacies to influence the dispensing of prescriptions more broadly.

"The government is going after payments to the gatekeepers that control the entry of drugs to a particular market. This is the new hotbed of fraud," Guttman said.

In the Novartis complaint, U.S. Attorney Preet Bharara said the alleged scheme had been highly lucrative for Novartis, resulting in "rapid, sometimes exponential growth in Myfortic sales." In one alleged example, Novartis offered a Los Angeles pharmacist a "bonus" rebate of 5 percent of the pharmacist's annual Myfortic sales, or several hundred thousand dollars, to switch as many as 1,000 patients to Myfortic.

IN FOOTSTEPS OF RISPERDAL CASE

Cases involving pharmacy providers "are one of the highest priorities of the FBI's health care fraud program," said FBI Assistant Director Ronald Hosko in a statement about the lawsuit. He said the program had established a centralized unit called the Major Provider Response Team to provide nationwide investigative assistance given the complexity of such cases.

Novartis disputed the claims and will defend itself, said spokeswoman Julie Masow in an email. The company is "committed to high standards of ethical business conduct and regulatory compliance in the sale and marketing of our products," she said.

The lawsuits over pharmacy rebates reflect a longstanding government concern over conflicts of interest in the healthcare context, said David Nadler, a lawyer at Dickstein Shapiro who represents companies in False Claims Act cases. But the role of pharmacies is coming under greater scrutiny, he said. The drug companies are likely to contest the extent to which pharmacies actually influence prescribing decisions, he added.

In 2009, Omnicare, a pharmacy that specializes in providing drugs to nursing home patients, paid $98 million to settle government and whistle-blower charges that it received kickbacks from Johnson & Johnson in exchange for agreeing to recommend that physicians prescribe J&J's antipsychotic drug Risperdal. The Justice Department later sued J&J over the alleged kickbacks in 2010, a case pending before the U.S. District Court for the District of Massachusetts.

The Novartis and Amgen cases appear to follow in the footsteps of the Omnicare case involving J&J, said Suzanne Durrell of the Durrell Law Office, a whistle-blower lawyer and former federal prosecutor. While working in the U.S. Attorney's office in Boston, she noticed that when the office announced a settlement, lawsuits would later crop up that were based on similar legal theories but against different industry players.

"The original Omnicare case involved J&J. Now you've got two other large drug manufacturers caught up in similar allegations," she said.

The case from Tuesday is U.S. v. Novartis Pharmaceuticals Corp, U.S. District Court, Southern District of New York, No. 11-8196.

For the United States: Assistant U.S. Attorneys Li Yu, Ellen London and Rebecca Martin.

For Novartis: Not immediately available.


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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)

thiru at keionline.org



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