AG Curtis Hill Announces $678M National Settlement With Novartis Pharmaceuticals Over Alleged Kickbacks

(INDIANAPOLIS) – Attorney General Curtis Hill announced Monday that Indiana, along with 26 other states and the District of Columbia, has joined the federal government in reaching an agreement that settles allegations against Novartis Pharmaceuticals Corp.

The settlement with Indiana will resolve allegations that Novartis paid kickbacks to health care practitioners in the form of cash, meals, entertainment and honoraria payments to induce them to prescribe various medications that treat hypertension or Type 2 Diabetes.

Under the settlement, Novartis agreed to pay $678 million to the federal government, Indiana, 26 other states and the District of Columbia. Of that amount, $103 million resolves claims pertaining to state Medicaid programs. About $1.1 million of the settlement resolves claims relating specifically to Indiana’s Medicaid program.

“Medicaid exists to help cover medical costs for individuals with limited incomes,” Attorney General Hill said. “Exposing waste, fraud and abuse in connection with Medicaid funds is part of our responsibility as stewards of the public trust, and we are committed to fulfilling our mission in this regard.”

The settlement resolves allegations that from January 2002 to November 2011, Novartis paid kickbacks to doctors to prescribe Lotrel, Valturna, Starlix, Tekamlo, Diovan HCT, Tekturna HCT and Exforge HCT — and that between January 2010 and November 2011, Novartis also did so for Exforge, Diovan and Tekturna. In court documents, it was alleged that Novartis systemically paid doctors to speak about certain drugs at sham events — with a veneer of education applied in an attempt to avoid the law — and covered the costs of lavish meals and entertainment for attendee doctors. The goal, according to allegations in the documents, was to induce doctors to write prescriptions for these Novartis drugs in violation of Indiana’s False Claims Act statutes. 

Novartis admitted aspects of the scheme in a stipulation filed in federal court in connection with the settlement. These admissions include details concerning excessive spending on meals and alcohol. In addition, Novartis admitted facilitating minimal medical discussions at these events. 

This settlement arises from a whistleblower action originally filed in 2011 in the U.S. District Court for the Southern District of New York under the federal False Claims Act and the named plaintiff states’ respective false claims/anti-fraud statutes. A National Association of Medicaid Fraud Control Units (NAMFCU) Team participated in the investigation and finalized the settlement with Novartis on behalf of the states. The NAMFCU Team was comprised of representatives from the Offices of the Attorneys General for the states of California, Illinois, New York, Texas, Virginia and Wisconsin.

The Indiana Medicaid Fraud Control Unit receives 75% of its funding from the U.S. Department of Health and Human Services under a grant award. The remaining 25% is funded by the State.