Novartis Pays $20M Over Medicaid Fraud Charges

In the latest instance of a drugmaker being accused of off-label marketing, Novartis has agreed to pay $19.9 million to resolve allegations made by Texas and the federal government that the Elidel eczema drug was illegally marketed to treat infant children, but harmful side effects – including cancer-related risks - were not properly disclosed.

Texas Attorney General Greg Abbott maintains that evidence indicated Novartis improperly urged physicians to prescribe Elidel to children under two years of age for uses that were never approved by the FDA. In fact, the agency required Novartis to place a Black Box warning on Elidel concerning the risk of cancers in infants. Consequently, the state Medicaid program overpaid for Elidel prescriptions (read his statement).

The settlement stems from a 2006 lawsuit filed by Donald Galmines, a former Novartis sales rep who worked for the drugmaker for five years in Illinois, according to court documents. Among the improper marketing practices cited, he alleged the drugmaker sponsored a study that Elidel was safe and effective for children younger than two years old, and there was no restriction on its usage, while failing to note safety risks. Novartis issued a press release without noting its funding of the study, the lawsuit states.

The narrative is familiar. This is, you may recall, one of many such settlements involving drugmakers that have agreed to resolve such charges over marketing practices over the past decade or more. (here is the lawsuit). Novartis, in fact, has been down this past before. Two years ago, the drugmaker paid $422.5 million for illegally promoting its Trileptal epilepsy med for unapproved uses, such as bipolar disorder and neuropathic pain, along with five other drugs – Diovan, Zelnorm, Sandostatin, Exforge and Tekturna (back story). Also in 2010, two units of the big drugmaker – Novartis Vaccines & Diagnostics and Novartis Pharmaceuticals – agreed to pay a $72.5 million fine in order to resolve civil False Claims Act charges over the marketing of the TOBI cystic fibrosis medicine (read here).