Michigan to receive portion of settlement to resolve kickback allegations against Novartis Pharmaceuticals

Michigan Attorney General Dana Nessel announced Tuesday that Michigan will receive a portion of a $678 million settlement with Novartis Pharmaceuticals Corp., resolving allegations that the company paid kickbacks to medical providers in the form of cash, meals, entertainment, and honoraria payments to induce them to prescribe various medications that treat hypertension or Type 2 diabetes.

The settlement includes 27 other states and the District of Columbia, with about $3 million of the total settlement amount resolving claims specifically related to Michigan’s Medicaid program.

From January 2002 and November 2011, Novartis allegedly paid kickbacks to doctors to prescribe Lotrel, Valturna, Starlix, Tekamlo, Diovan HCT, Tekturna HCT and Exforge HCT. Additionally, between January 2010 and November 2011, Novartis allegedly engaged in the same conduct related to its drugs Exforge, Diovan and Tekturna. 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, to induce doctors to write prescriptions for these Novartis drugs in violation of Michigan’s Medicaid False Claim Act.  

“For nearly a decade, Novartis pushed its own agenda and took advantage of the Medicaid program, a tax-funded benefit that exists to assist individuals in securing health care,” Nessel said. “These self-serving tactics have no place in Michigan’s health care system, and my office is committed to ensuring patients and taxpayers are protected from pharmaceutical companies and doctors seeking to line their pockets at the expense of the public.”

In a stipulation filed in federal court in connection to the settlement, Novartis admitted aspects of the scheme, including that it engaged in excessive meal and alcohol spending, minimal medical discussions at Novartis’s events and repeat attendance by doctors.  

This settlement arises from a whistleblower action originally filed in 2011 in the United States 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. 

This matter was handled by the Michigan Department of Attorney General’s Health Care Fraud Division. The Health Care Fraud Division receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $4,895,964 for Federal fiscal year 2020.?The remaining 25 percent, totaling $1,631,987, is funded by the State of Michigan.

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