Pharmaceutical giant Novartis has agreed to pay $678 million to settle long-standing allegations of operating a nationwide kickback scheme that provided doctors with expensive meals, speaking fees, and entertainment to boost prescriptions of their cardiovascular and diabetes medications.
The settlement, announced by the U.S. Department of Justice, resolves claims that the company spent "hundreds of millions of dollars" on speaker programs that effectively served as bribes to influence prescription patterns. According to acting U.S. attorney Audrey Strauss, these inducements included "speaking fees, exorbitant meals, and top-shelf alcohol."
Details of the Alleged Misconduct
Federal investigators uncovered numerous instances of excessive spending, including restaurant bills reaching $3,000 for two people and $2,000 for three people. The company allegedly hosted expensive fishing trips and meals at Hooters restaurants as part of their incentive program. Some speaking events that doctors were paid for reportedly never took place.
The DoJ investigation revealed that Novartis maintained a systematic approach to rewarding high-prescribing physicians with paid speaking roles. Doctors who failed to maintain or increase prescription levels risked being dropped from the program.
Additional Settlement for Medicare Violations
In a separate agreement, Novartis will pay an additional $51 million to resolve allegations of illegally covering Medicare copayments for patients prescribed two of its drugs:
- Gilenya (fingolimod) for multiple sclerosis
- Afinitor (everolimus) for cancer treatment
History of Legal Challenges
This settlement adds to Novartis's history of similar legal issues. Notable previous settlements include:
- $422 million in 2010 for unauthorized marketing of Trileptal and other drugs
- $390 million in 2015 for kickback allegations involving Myfortic and Exjade
- $347 million in recent bribery charges settlement involving activities in Greece
Corporate Reform Measures
Under new CEO Vas Narasimhan, Novartis has committed to significant reforms in its medical education and engagement practices. The company's new corporate integrity obligations, extending through 2025, include:
- Strict limitations on the use of paid external physicians
- Elimination of restaurants as venues for medical education
- Transition toward digital engagement platforms
"We are a different company today – with new leadership, a stronger culture, and a more comprehensive commitment to ethics embedded at the heart of our company," stated Narasimhan.
The settlement marks a significant shift in pharmaceutical industry practices, moving away from traditional entertainment-based physician engagement toward more transparent and digital-focused interactions.
