U.S. 2nd Circuit Court Revives Novartis Illegal Kickbacks Lawsuit

The U.S. Court of Appeals for the Second Circuit reinstated a whistleblower lawsuit against Swiss pharmaceutical giant Novartis on Friday. The lawsuit alleges that Novartis provided illegal kickbacks to doctors to boost sales of its multiple sclerosis drug, Gilenya. In a 3-0 ruling, the appellate court found that whistleblower Steven Camburn may proceed in attempting to prove that Novartis violated the federal False Claims Act by organizing so-called “sham” speaker events to promote Gilenya sales.

Camburn, a former sales representative at Novartis, claims the company paid doctors thousands of dollars and invited them to dine at upscale restaurants to speak at events nominally for educational purposes, which were largely social in nature. Camburn stated that such actions led to fraud against government health insurance programs, including Medicare Part D, Medicaid, and TRICARE, as doctors and pharmacies submitted reimbursement claims for Gilenya tainted by kickbacks.

Circuit Judge Myrna Perez noted that Camburn sufficiently alleged that the speaker events hosted by Novartis involved sparse or no legitimate participants, overcompensated doctors for canceled events, and selected speakers to encourage prescribing—actions that strongly inferred the drugmaker's intent to induce fraud. She agreed with seven other federal appeals courts that in whistleblower cases, defendants violate federal anti-kickback statutes if their payments aim, at least in part, to induce purchases of federally reimbursable healthcare products.

Novartis and its attorneys declined to comment on the ruling, while President-elect Donald Trump urged the Supreme Court to stay a law banning TikTok.

The False Claims Act allows whistleblowers to sue on the government’s behalf and share in any recovery. Friday's decision overturned a September 2022 dismissal by U.S. District Judge Kimba Wood in Manhattan, remanding the case for further proceedings. It affirmed Judge Wood's dismissal of some of Camburn's allegations.

Camburn's attorney, James Miller, expressed eagerness to resolve his client's "core allegations" in court. The case dates back to May 2013, approximately two and a half years after Gilenya received federal regulatory approval. Gilenya’s sales have steadily declined due to generic competition, dropping from $3.22 billion in 2019 to $925 million in 2023, with total sales of $443 million in the first nine months of 2024.

Novartis agreed in 2020 to pay more than $729 million to resolve U.S. government allegations of illegal kickbacks to doctors and patients to promote drug sales. The case is Camburn v. Novartis Pharmaceuticals Corp., U.S. Court of Appeals for the Second Circuit, No. 22-2708.