Greece goes after Novartis for alleged bribery and kickbacks
Published: May 18, 2022
By Mark Terry
Greece’s Health Minister Thanos Plevris announced plans to sue Novartis over what he alleges are illegal practices. In addition to demanding compensation, the country is implementing a three-point plan.
The plan includes a mandate to set up a trading committee, appointing a U.S. law firm to defend the rights of Greece, and “an order for bringing an action before the Greek Justice for claiming the compensation for the insult of the Greek state with a reservation for any additional damage that will be determined and which has already been prepared.”
The scandal has been playing out for several years, with Novartis alleged to have paid Greek public officials and health care providers to increase prescriptions for its drugs and maintain higher prices.
Plevris stated that the Greece government is “taking all measures to hold Novartis accountable and compensate the Greek state for its illegal practices.”
Novartis is not the only drug company to run afoul of corruption laws in various countries, but it has had prominent cases. Back in 2015, the Swiss-based company paid $390 million to settle a civil lawsuit linked to the kickback payments to specialty pharmacy companies that distributed Exjade and Myfortic. The settlement was paid to the U.S. government and state Medicaid programs. The case involved more than 40 U.S. states.
In 2018, in relation to a 2016 federal lawsuit, at least 16 generic drug companies, including Novartis’ generics unit Sandoz, paid the U.S. government $195 million to settle the price-fixing charges. Last year, the U.S. Department of Justice was investigating Novartis’ marketing and pricing of Entresto over the past five years as well as kickbacks, or what Novartis called “remuneration provided to healthcare professionals” in a filing. And in 2020, the company paid more than $642 million in multiple agreements to resolve government charges that the company violated the False Claims Act.
Novartis had agreed to pay $41.25 million to resolve accusations that it illegally paid the copays for patients taking its drugs in the first settlement. This was related to Novartis’s alleged illegal use of three foundations as conduits to pay the copays of Medicare patients taking Gilenya, a multiple sclerosis drug, and Afinitor, for advanced renal cell carcinoma.
A second settlement revolved around alleged payments to physicians. To resolve that issue, Novartis agreed to pay the government $591,442,008 over allegations that it provided kickbacks to doctors for a range of drugs, including Lotrel, Valturna, Starlix, Tekturna, Tekamlo and others.
Although Novartis is currently the focus of the Greek government, it’s not as if it’s the only biopharma company that has gotten caught conducting less-than-ideal business practices around the world. Canada-based Valeant Pharmaceuticals International, now Bausch & Lomb, has a whole range of corruption scandals that forced its CEO J. Michael Pearson and much of its C-suite out of the company. These included alleged kickbacks to Pennsylvania-based Philidor Rx Services as well as accounting fraud, insider trading, “channel stuffing,” and drug pricing.
None of that quite compared to the sheer drama of the GlaxoSmithKline bribery story of 2014 to 2016, which resulted in the company being fined almost $500 million by a southern China Court in 2014. The court also sentenced Mark Reilly, formerly GSK’s China general manager, and four other company managers, to prison terms.
Early in the case, a sex tape of Reilly and his girlfriend was sent to the company. Reilly hired a private investor to find out who planted the camera in his apartment. The British investigator, Peter Humphrey, and his American wife, Yu Yingzeng, were sentenced to prison in August 2014 for illegally acquiring private recordings of Chinese citizens and selling the information to GSK and other clients. Reilly confessed to the crimes on Chinese TV, although there were rumors and allegations that Reilly and Humphrey were set up by rogue officers in China’s law enforcement and security programs.
In June 2015, Humphrey was released early from prison for cancer-related health problems. His wife was released shortly afterward. The two of them operated ChinaWhys since 2003, an international business risk advisory firm to investigate fraud and conduct due diligence in China for international companies.
Humphrey had been hired to investigate whistleblower allegations related to the bribery charges. Reilly was deported in 2015, with both Humphrey and Yu Yingzeng following suit after being released from prison.
In 2018, Sanofi settled corruption charges with the U.S. Securities and Exchange Commission for more than $25 million. The charges were that Sanofi subsidiaries in Kazakhstan and the Middle East made illegal payments in order to win business. These violated the U.S. Foreign Corrupt Practices Act.
The Greek case against Novartis has a political element, with the current health minister taking shots at the SYRIZA government that was in power from 2015 to 2019, and which involved at least 10 politicians in the government.
“Unlike the SYRIZA government, which invested in the conspiracy and did not claim anything from the company, the New Democracy government is taking all measures to hold Novartis accountable and compensate the Greek state for its illegal practices,” Plevris stated.