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Novartis Sued By U.S. Over Alleged Pharmacy Kickbacks

Pharmaceutical Giant Sued By U.S.
Reuters
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* Civil fraud lawsuit alleges improper payments

* U.S. says Novartis sought to boost sales of Myfortic

* Novartis had no immediate comment

By Bernard Vaughan and Jonathan Stempel

April 23 (Reuters) - The U.S. government filed a civil fraud lawsuit against Novartis AG on Tuesday, accusing a unit of the Swiss drug maker of causing the Medicare and Medicaid programs to pay tens of millions of dollars in reimbursements based on fraudulent, kickback-tainted claims.

U.S. Attorney Preet Bharara in Manhattan said Novartis Pharmaceuticals Corp had since 2005 induced at least 20 pharmacies to switch thousands of kidney transplant patients to its immunosuppressant drug Myfortic from competitors' drugs, in exchange for kickbacks disguised as rebates and discounts.

He said Novartis tried to conceal the scheme by omitting the agreements from rebate and discount contracts with pharmacies.

In one alleged case, Novartis offered a Los Angeles pharmacist a "bonus" rebate of 5 percent of that pharmacist's annual Myfortic sales, or several hundred thousand dollars, to switch as many as 1,000 patients to Myfortic.

"Novartis co-opted the independence of certain pharmacists and turned them into salespeople," Bharara said in a statement.

The lawsuit was filed in the U.S. District Court in Manhattan, and seeks civil penalties and triple damages from Novartis for violating the federal False Claims Act.

Novartis spokeswoman Julie Masow had no immediate comment.

Myfortic net sales totaled $579 million in 2012, up 12 percent from a year earlier, according to Novartis' annual report. The Novartis Pharmaceuticals unit has offices in East Hanover, New Jersey.

In his announcement, Bharara called Novartis a "repeat offender," referring to a settlement of health care fraud charges based on kickbacks less than three years ago.

Novartis in Sept. 2010 agreed to pay $422.5 million to resolve criminal and civil liability over its marketing of several drugs, including the epilepsy drug Trileptal. ()

The case is U.S. v. Novartis Pharmaceuticals Corp, U.S. District Court, Southern District of New York, No. 11-08196.

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Before You Go

America's Fattest Cities: 24/7 Wall St.
11. Erie, Penn.(01 of11)
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11. Erie, Penn.> Pct. obese: 32.5% (tied for 10th highest)> Pct. with high blood pressure: 28.5% (93rd highest)> Pct. exercise regularly: 45.2% (3rd lowest)> Poverty rate: 16.4% (181st lowest)> Pct. with at least bachelors degree: 24.2% (164th lowest)One of the big problems for Erie that contributes to its high obesity rate is a lack of exercise. Just 45.2% of Erie residents claimed that they exercised at least 30 minutes a day for at least three days during the past week, lower than all but two metro areas surveyed by Gallup-Healthways. While as many as 93.6% of residents said it was easy to get fruits and vegetables — among the top third of all metro areas — only 90.1% said it was easy to find a safe place to exercise — among the bottom third of all metro areas.Read more at 24/7 Wall St. (credit:AP)
10. Beaumont-Port Arthur, Texas(02 of11)
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> Obesity rate: 32.5% (tied for 10th highest)> Pct. with high blood pressure: 33.3% (29th highest)> Pct. exercise regularly: 52.2% (79th lowest)> Poverty rate: 17.6% (135th highest)> Pct. with at least bachelors degree: 15.7% (27th lowest)Not only were Beaumont metro area residents among the most obese in 2012, but they also ranked as some of the most physically unhealthy Americans in the nation. Only 73.5% of those surveyed noted they had no health problems that kept them from age-appropriate activities, among the worst rates in the nation. Similarly, more than 15% had diabetes — also among the worst rates. Beaumont area residents also do not tend to practice healthy behaviors. Just 56.6% of respondents told Gallup they ate healthy all day, the second-worst rate in the nation. Additionally, there are large parts of both Beaumont and Port Arthur where residents live far from any source of healthy and affordable food, such as grocery stores.Read more at 24/7 Wall St. (credit:WikiMedia:)
9. Reading, Penn.(03 of11)
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> Obesity rate: 32.8%> Pct. with high blood pressure: 31.2% (52nd highest)> Pct. exercise regularly: 46.4% (7th lowest)> Poverty rate: 13.7% (85th lowest)> Pct. with at least bachelors degree: 23.0% (145th lowest)In 2012, Reading had one of the highest obesity rates in the nation for the third year in a row. As many as 6% of residents surveyed stated they had experienced a heart attack, the 10th highest percentage for any metro area in the United States. Residents also were more likely than the majority of Americans to have high blood pressure and cholesterol. When it comes to healthy behavior, just 46.4% of residents exercised at least three times per week for 30 minutes, among the worst rates in the nation. However, residents were more likely than most people surveyed to report easy access to affordable fruits and vegetables.Read more at 24/7 Wall St. (credit:WikiMedia:)
8. Charleston, W.Va.(04 of11)
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> Obesity rate: 32.9%> Pct. with high blood pressure: 41.1% (2nd highest)> Pct. exercise regularly: 49.0% (25th lowest)> Poverty rate: 18.2% (118th highest)> Pct. with at least bachelors degree: 21.8% (124th lowest)Charleston’s high obesity rate has led to significant health problems among the area’s residents. More than 41% reported high blood pressure, more than all but one metro area. In addition, 6.3% of the adult population had experienced a heart attack, the fifth-highest percentage of all metro areas, while 37.1% of the population had recurring pain in their knee or leg, more than all but two metro areas. More than 32% of the population smoked as of 2012, more than all other metro areas. Just 84.8% of the population reported that was easy to find affordable fruits and vegetables, the third-lowest percentage of all metro areas. Meanwhile, less than 82% of respondents said it was easy to find a safe place to exercise, the lowest rate in the country.Read more at 24/7 Wall St. (credit:WikiMedia:)
7. Toledo, Ohio(05 of11)
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> Obesity rate: 33.0%> Pct. with high blood pressure: 29.1% (85th highest)> Pct. exercise regularly: 55.0% (59th highest)> Poverty rate: 20.2% (66th highest)> Pct. with at least bachelors degree: 23.5% (154th lowest)Toledo residents were more likely than most Americans to have high cholesterol, high blood pressure or diabetes, or to have suffered a heart attack. Among the problems facing Toledo, 10.4% of residents stated they lacked access to a safe place to exercise, versus 8% nationally. Residents also were more likely than most Americans to smoke, with 23.5% of people surveyed in the area reporting they smoked, versus 19.2% nationwide. Toledo had a 20.2% poverty rate in 2011, well above the national rate of 15.9%.Read more at 24/7 Wall St. (credit:WikiMedia:)
6. Myrtle Beach-North Myrtle Beach-Conway, S.C.(06 of11)
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> Obesity rate: 33.1%> Pct. with high blood pressure: 40.9% (3rd highest)> Pct. exercise regularly: 55.8% (46th highest)> Poverty rate: 18.9% (98th highest)> Pct. with at least bachelors degree: 24.4% (169th lowest)Nearly 41% of the adult residents in the Myrtle Beach metropolitan area reported having high blood pressure, the third-highest percentage of all metro areas in the nation. Moreover, 17.5% of the adult population has been told they have diabetes, more than all but one metro area. Lack of medical care could be exacerbating the obesity problem. As many as 21.7% of the population did not have health insurance in 2011, the second worst rate in the country and almost triple the national average. Access to affordable, healthy food is inadequate in the areas in and around both Myrtle Beach and Conway.Read more at 24/7 Wall St. (credit:WikiMedia:)
5. Hagerstown-Martinsburg, Md.-W.Va(07 of11)
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> Obesity rate: 33.4%> Pct. with high blood pressure: 33.8% (26th highest)> Pct. exercise regularly: 49.7% (30th lowest)> Poverty rate: 13.6% (84th lowest)> Pct. with at least bachelors degree: 19.2% (81st lowest)Hagerstown residents rated poorly for practicing healthy behaviors. Less than 61% of those surveyed ate healthy all day, and less than half exercised regularly — both worse than the majority of metro areas. However, respondents were nearly as likely to report access to affordable, healthy food as most Americans, and were more likely to report they had access to a safe place to exercise. As of 2011, just 19.2% of adult residents were college graduates, versus 28.5% nationally. Hagerstown was among the top 20% nationwide for diabetes, hypertension, heart attacks and high cholesterol rates.Read more at 24/7 Wall St. (credit:WikiMedia:)
4. Mobile, Ala.(08 of11)
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> Obesity rate: 33.7%> Pct. with high blood pressure: 35.6% (12th highest)> Pct. exercise regularly: 52.6% (86th lowest)> Poverty rate: 19.4% (84th highest)> Pct. with at least bachelors degree: 20.2% (102nd lowest)The Mobile metropolitan areas is poorer than most, which may contribute to its high obesity. The poverty rate in 2011 of 19.4%, while far from the highest, was well above the 15.9% across the country. Meanwhile, the median household income of $42,372 was more than $8,000 less than the national median. Worse, only 71.4% of the population said they had all the money they needed to buy food at all times in the past 12 months, less than all but two other metropolitan areas. Approximately 35.6% of the population were told they had high blood pressure, while 14.1% of the population were diagnosed with diabetes, both among the highest percentages of all metro areas surveyed.Read more at 24/7 Wall St. (credit:WikiMedia:)
3. Little Rock-North Little Rock-Conway, Ark.(09 of11)
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> Obesity rate: 34.7%> Pct. with high blood pressure: 37.3% (5th highest)> Pct. exercise regularly: 52.7% (87th lowest)> Poverty rate: 14.7% (118th lowest)> Pct. with at least bachelors degree: 27.9% (132nd highest)Just 58.9% of Little Rock area residents claimed they ate healthy all day, one of the lowest rates in the United States. The lack of healthy eating may partially be attributable to the fact that large parts of Little Rock do not have nearby access to healthy, affordable food. Like many metro areas, the high obesity rate likely has contributed to the area residents’ poor overall health. More than 37% of the adult population has been told they have high blood pressure, the fifth-highest percentage of all metro areas. More than 28% of the adult population had recurring pain in the knee or leg, among the highest of all metro areas surveyed.Read more at 24/7 Wall St. (credit:WikiMedia:)
2. Huntington-Ashland, W.Va., Ky.(10 of11)
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> Obesity rate: 37.7%> Pct. with high blood pressure: 43.3% (the highest)> Pct. exercise regularly: 46.5% (8th lowest)> Poverty rate: 19.9% (72nd highest)> Pct. with at least bachelors degree: 18.8% (74th lowest)Only 67% of those surveyed in the Huntington area stated they had no health problems preventing them from participating in normal activities, tied for the worst percentage in the nation with Charleston, W.Va. Just 77% of residents stated they had enough energy to do what they wanted in the past day, also the lowest percentage in the nation. Additionally, more than 43% of residents had high blood pressure, while 8.9% of those surveyed had experienced a heart attack, in both cases the highest rates in the nation. Just 87.5% of residents claimed they had access to a safe place to exercise, one of the lowest rates in the country.Read more at 24/7 Wall St. (credit:WikiMedia:)
1. McAllen-Edinburg-Mission, Texas(11 of11)
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> Obesity rate: 38.5%> Pct. with high blood pressure: 26.6% (57th lowest)> Pct. exercise regularly: 52.2% (79th lowest)> Poverty rate: 37.7% (the highest)> Pct. with at least bachelors degree: 16.0% (30th lowest)McAllen was the fattest metropolitan area in the country in 2012, with 38.5% of the adult population considered obese. The high obesity rate has likely contributed to area residents’ poor health. More than 21% of the population has been diagnosed with diabetes, more than any other metro area in the United States. Poverty may play a large role in the community’s health problems as well. The metro region had the highest poverty rate in the country, with 37.7% of the population living below the poverty line in 2011. More than 17% of the population also lacked health coverage that year, among the highest of all U.S. metro areas. The vast majority of the McAllen metro area is located in a food desert, indicating a severe lack of access to healthy foods for residents.Read more at 24/7 Wall St. (credit:WikiMedia:)
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