Kickback claims: Attorney general files lawsuit against Novartis Pharmaceuticals, and settles with BioScrip

New York Attorney General Eric T. Schneiderman announced Wednesday that his office has filed a lawsuit alleging that Novartis Pharmaceuticals Corp. paid kickbacks to a New York-based pharmacy company to boost sales of the company’s iron-reduction drug, Exjade. The drug is often prescribed to consumers who need regular blood transfusions.

Schneiderman also announced an agreement with BioScrip Inc. under which the pharmacy will pay a total of $15 million to cover costs to Medicaid and Medicare nationally for excessive Exjade prescriptions.

The lawsuit charges that the kickback scheme began in 2007, when Novartis executives had become concerned that patients taking Exjade were discontinuing its use because of harmful side effects. The kickbacks were designed to get the pharmacy to keep patients on the drug as long as possible, Schneiderman said.

The lawsuit alleges that as part of the scheme, BioScrip employees made thousands of calls to Medicaid recipients in New York and other states from a central call center in Ohio encouraging them to refill Exjade prescriptions or resume taking Exjade. It also alleges that BioScrip employees downplayed the side effects of Exjade in the calls.

“When it comes to prescription drugs, New Yorkers and, indeed, all patients have a right to expect unbiased information from their pharmacy,” Schneiderman said. “This arrangement between Novartis and BioScrip was dangerous for patients and is against the law. Our lawsuit against Novartis and our agreement with BioScrip send a clear message: Drug companies cannot pay pharmacies to promote drugs directly to patients.” 

The Food and Drug Administration approved Exjade in late 2005 for the treatment of chronic iron overload due to blood transfusions.

When Novartis launched the drug, it created a closed distribution network in which most Exjade prescriptions in the United States were filled by one of three pharmacies selected by Novartis, he said. BioScrip was one of the pharmacies in this network, which Novartis promoted to doctors and patients as a way to supposedly foster patient education, according to the lawsuit.

Schneiderman said Novartis controlled which pharmacy filled many of the prescriptions for Exjade dispensed through this network.