Novartis $3,500 Kickback Case Resumes

The U.S. Court of Appeals for the Second Circuit has reinstated the lawsuit against Novartis. The plaintiff is Steven Camburn, a former sales representative for Novartis, who alleges that the company illegally paid kickbacks to doctors to promote its multiple sclerosis drug, Gilenya.

Camburn claims that Novartis induced doctors to engage in social activities under the guise of academic conferences by paying thousands of dollars and arranging business dinners at upscale restaurants to promote Gilenya. In 2013, Camburn filed a lawsuit under the U.S. False Claims Act, accusing Novartis of paying $3,500 to speaker doctors in exchange for promoting Gilenya. However, the lawsuit was initially dismissed, and the plaintiff later filed lawsuits in other courts, all of which failed due to a lack of specific evidence.

The plaintiff further points out that Novartis not only initiated false patient programs to promote Gilenya but also held one-on-one dinners with doctors and instructed them to commit insurance fraud by overcharging during patients’ initial treatment observations. The plaintiff believes that Novartis encouraged pharmacies and doctors to submit false reimbursement claims to the government involving Medicare Part D, Medicaid, and TRICARE health insurance programs. Despite the repeated dismissal of the lawsuit, the district judge noted a lack of specific details, but the plaintiff and his attorney appealed to the Second Circuit Court once again.

The appellate court judges ruled that the district court’s judgment showed bias and noted that the defendant had adequately elucidated certain factual details, such as the academic meetings organized by Novartis and the selection of speakers, which suggested that Novartis may have induced doctors and patients to engage in fraudulent activities.

According to the latest ruling, the U.S. appellate court stated that the plaintiff has adequately argued that Novartis violated the U.S. Anti-Kickback Statute and can attempt to demonstrate that Novartis promoted Gilenya sales through hosting false academic activities, thereby violating the U.S. False Claims Act.

Gilenya is the world's first oral medication for treating multiple sclerosis, approved by the FDA for sale in the U.S. in 2010, with global sales reaching $3.341 billion in 2018, and it was approved for sale by the China National Medical Products Administration in July 2019. Since its launch, Gilenya's sales have increased year by year, although it experienced a decline in sales after 2016 due to competition from peers such as Sanofi, Roche, and Bayer Pharmaceuticals, as well as patent expiry. Nevertheless, it remains one of the best-selling products in Novartis's neuroscience division. In 2021, Gilenya brought in nearly $2.8 billion in revenue for Novartis, down from $3.22 billion in 2019.

However, due to competition from generics, Gilenya's sales have continued to decline. In 2023, sales dropped to $925 million, totaling $443 million in the first nine months of 2024. Despite this, Novartis has new product pillars in the multiple sclerosis field, with Ofatumumab sales reaching $2.171 billion in 2023, a 99% year-on-year increase.

Despite facing challenges, Novartis still needs to deal with previous legal issues.