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Suite 1250Philadelphia, Pennsylvania 19106-4476(215) 861-8200 NOVARTIS PHARMACEUTICALS CORPORATION TO PAY
Company reaches plea and civil settlement agreements
PHILADELPHIA – A criminal information1 was filed today against Novartis Pharmaceuticals Corporation (“NPC”) for the off-label marketing of the anti-epileptic drugTrileptal, announced Assistant Attorney General for the Justice Department’s Civil DivisionTony West and United States Attorney Zane David Memeger. NPC has agreed to plead guiltyand pay a criminal fine and forfeiture of $185 million. NPC will also pay $237.5 million toresolve civil liabilities for its off-label marketing of Trileptal and payment of kickbacks to healthcare providers to induce them to prescribe Trileptal, as well as Diovan, Exforge, Tekturna,Zelnorm, and Sandostatin. Joining in today’s announcement were Special Agent-in-Charge Thomas P. Doyle of the Food and Drug Administration’s Office of Criminal Investigation, Special Agent-in-ChargeNicholas DiGiulio of the Department of Health and Human Services’ Office of InspectorGeneral, and Special Agent-in-Charge Elizabeth Farcht of the United States Postal Service’sOffice of Inspector General.
The information charges NPC with introducing misbranded drugs into interstate commerce between July 2000 and December 2001. The Food and Drug Administration (“FDA”)had approved Trileptal (chemical name “oxcarbazepine”) for the treatment of epilepsy patients. According to the information, NPC’s management created marketing materials promotingTrileptal for off-label uses, including neuropathic pain and bipolar disease, which were not FDA-approved uses. NPC allegedly targeted psychiatrists and pain specialists, who were known touse anti-epileptic drugs like Trileptal off-label. The information charges that NPC decided tomarket and promote Trileptal as a treatment for both of these indications and directed its salesforce to visit doctors who would not normally prescribe Trileptal due to the nature of theirpractice. The company also allegedly funded continuing medical education programs, usingother medical professionals to promote off-label uses of Trileptal. According to the information,NPC profited by hundreds of millions of dollars from this misbranding and off-label promotionof Trileptal. 1An information is an accusation. A defendant is presumed innocent unless and until proven guilty.
“This resolution demonstrates the Department of Justice’s ongoing dedication to taking action against pharmaceutical fraud in all its forms,” said Tony West, Assistant Attorney Generalfor the Civil Division of the Department of Justice. “Unlawful off-label promotion andproviding illegal inducements to health care professionals undermine the integrity of our healthcare system and we will continue to pursue these types of violations.” “Off-label marketing can undermine the doctor-patient relationship and adversely influence the clear judgment that a doctor’s patients have come to rely on and trust,” saidMemeger. “Pharmaceutical companies have a legal obligation to promote the drugs theymanufacture only for uses that the Food and Drug Administration has deemed are safe andeffective. That legal obligation takes priority over a company’s bottom line. This prosecutiondemonstrates our continuing commitment to ensure that pharmaceutical companies comply withthe law.” In a separate civil settlement agreement, NPC agreed to pay the United States and participating states $237.5 million, plus interest, to settle allegations that it caused invalid claimsfor payment for Trileptal, Diovan, Tekturna, Exforge, Sandostatin and Zelnorm to be submittedto government programs such as Medicare, Medicaid, TRICARE, and the Federal EmployeesHealth Benefits Program and caused purchases of those drugs by the Department of VeteransAffairs, Department of Defense, Defense Logistics Agency, and the Department of Labor. Thestate Medicaid programs and the District of Columbia will share $88,258,694 of the settlement. The civil settlement resolves claims that NPC knowingly promoted the sale of Trileptal for off-label uses including bipolar disorder and neuropathic pain, and paid illegal kickbacks tohealth care professionals through mechanisms such as speaker programs, advisory boards,entertainment, travel and meals to induce them to prescribe Trileptal, as well as Diovan,Zelnorm, Sandostatin, Exforge and Tekturna. “Today's settlement demonstrates the government's continued scrutiny of the sales and marketing practices of pharmaceutical companies that put profits ahead of the public health,”said Special Agent-in-Charge Thomas Doyle, FDA’s Office of Criminal Investigations. “We willcontinue to seek this kind of criminal resolution and stiff sanctions when pharmaceuticalcompanies undermine the drug approval process by promoting drugs for uses not approved bythe FDA as safe and effective.” “OIG will carefully monitor the Corporate Integrity Agreement to ensure that Novartis is more transparent in its business transactions, that its Board of Directors is held moreaccountable, and that the names of physicians receiving payments are publicly disclosed,” saidDepartment of Health and Human Services Inspector General Daniel R. Levinson. “The resultwill be stronger protections for patients and the nation's taxpayers.” “This settlement is a significant victory in the on-going effort against fraudulent workers’ compensation claims,” said Special Agent-in-Charge Elizabeth Farcht, of the United States Postal Service Office of Inspector General’s Eastern Area Field Office. “The workers’compensation program benefits thousands of postal employees and the Postal Service paysmillions of dollars for these benefits. When our employees are treated with drugs promoted foruse in an off-label manner, this has the potential for causing patient harm and leads to inflatedprogram costs for the Postal Service. This is why it is important that we participate in these jointinvestigations,” This settlement also resolves four qui tam (“whistle blower”) actions: United States ex rel. Jim Austin v. Novartis Pharmaceuticals Corporation, Civil Action No. 03-1551 (UnitedStates District Court for the Middle District of Florida); United States ex rel. Daryl Copeland v.
Novartis Pharmaceuticals Corp.
, Civil Action No. 06-1630 (United States District Court for theEastern District of Pennsylvania); United States ex rel. Steve McKee v. NovartisPharmaceuticals Corporation, Civil Action No. 04-1664 (United States District Court for theEastern District of Pennsylvania); United States ex rel. Jeremy Garrity v. NovartisPharmaceuticals Corporation, Civil Action No. 08-2588 (United States District Court for theEastern District of Pennsylvania). These cases were filed by former NPC employees whoidentified the company’s illegal marketing practices. To encourage individuals to come forwardand identify companies that defraud the government, federal law permits whistle blowers toshare in the recovery for such fraud. In this case, the whistle blowers will share in $25,675,035of the federal recovery.
NPC also signed a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). The company is subject toexclusion from Federal health care programs, including Medicare and Medicaid, for a materialbreach of this CIA and subject to monetary penalties for less significant breaches. Among otherthings, the CIA requires the Board of Directors (or a committee of the Board) to annually reviewthe company's compliance program with the help of an outside expert and certify itseffectiveness; that certain senior executives annually certify that their departments or functionalareas are compliant; that NPC send doctors a letter notifying them about the settlement; and thatthe company posts on its website information about payments to doctors, such as honoraria,travel or lodging. The five-year agreement further requires the implementation of a complianceprogram addressing promotional activities.
This resolution is part of the Eastern District of Pennsylvania’s Special Focus team This case was investigated by the Food and Drug Administration’s Office of Criminal Investigations, the Department of Health and Human Services Office of the Inspector General,and the United States Postal Service Office of Inspector General. Assistance was provided byrepresentatives of the FDA’s Office of Chief Counsel and the National Association of MedicaidFraud Control Units. The Corporate Integrity Agreement was negotiated by Department ofHealth and Human Services’ Office of the Inspector General. The criminal case was prosecuted by Assistant United States Attorneys Karen Marston, Frank Costello, Special Assistant United States Attorney Catherine Votaw, and Department ofJustice Office of Consumer Litigation Trial Attorney Patrick Jasperse. The civil case wasprosecuted by Assistant United States Attorneys Marilyn May, Jacqueline Romero, and PaulKaufman and by United States Department of Justice Civil Frauds Division Trial AttorneyJessica Champa. NPC’s guilty plea and sentence are not final until accepted by the United States District Court. The U.S. Attorney’s Office acknowledges NPC’s cooperation with the investigation andresolution of this case. UNITED STATES ATTORNEY'S OFFICE Contact:
M edia Contact
Suite 1250, 615 Chestnut Street
Philadelphia, PA 19106


Pharmaceutical directive (am-rl)

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