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AG Gansler Files Suit against Drug Maker Novartis over Kickback Scheme
Secures settlement with pharmacy BioScrip over sales of iron-reducing drug

Baltimore, MD (January 13, 2014) -Attorney General Douglas F. Gansler has filed a civil complaint alleging that Novartis Pharmaceuticals Corporation paid kickbacks to Bioscrip, Inc., formerly a national pharmacy company. The scheme was designed to boost sales of the iron-reduction drug, Exjade, to patients in Maryland and other states. BioScrip has agreed in principle to resolve claims related to the scheme's impact on Maryland's Medicaid program. Under the settlement, Maryland is expected to receive about $13,500.

"It is clear that the pharmacy took part in a scheme to boost its profits and the expense of sound patient care," said Attorney General Gansler. "The kickback scheme not only violated the law, it potentially put Marylanders at risk of serious health consequences."

The complaint alleges that the kickback scheme began in February 2007 at a time when Novartis executives became concerned that patients taking Exjade were discontinuing its use because of side effects. It's further alleged that the practice continued until May 2012. The kickbacks, the complaint alleges, were designed to get BioScrip to try to keep patients on the drug as long as possible. According to the complaint, BioScrip employees made thousands of calls to Medicaid recipients in Maryland and other states from a central call center to encourage them to refill Exjade prescriptions or resume taking Exjade. The complaint also alleges that BioScrip employees downplayed the side effects of Exjade in these calls.

The settlement with Bioscrip is the result of an investigation conducted by the Medicaid Fraud Control Units of several states, including Maryland, the U.S. Attorney's Office for the Southern District of New York, and other federal agencies. BioScrip has agreed to pay $15 million to the federal government and state governments to resolve Medicaid and Medicare claims related to the scheme. BioScrip is based in Elmsford, New York and sold most of its pharmacy business in 2012.

Exjade was approved by the FDA 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. BioScrip was one of the pharmacies in this network, which Novartis promoted to doctors and patients as a way to purportedly foster patient education. Novartis controlled which pharmacy filled many of the prescriptions for Exjade dispensed through this network. During the period when the kickback scheme was in place, Maryland's Medicaid program paid about $500,000 for Exjade prescriptions filled by BioScrip.

The complaint against Novartis alleges that Novartis used its control of Exjade prescriptions as well as various rebates and discounts to pay kickbacks to BioScrip. For instance, according to the complaint, Novartis created an "Exjade Scorecard" that measured how long patients took Exjade, and Novartis used this Scorecard to give more new patients to the pharmacy that kept patients on the drug the longest. The complaint alleges that BioScrip often won this competition created by Novartis and received valuable new patient referrals as a result. The complaint cites a former BioScrip supervisor who stated under oath that this competition and the rebates provided by Novartis, "caused (BioScrip) to be focused exclusively on the number of orders and refill rates, rather than on patient care." In connection with its settlement agreement, BioScrip admitted many aspects of this scheme, including Novartis' use of the Exjade Scorecard.

The complaint against Novartis was filed under the Maryland False Claims Act and other statutes in U.S. District Court for the Southern District of New York. Maryland, along with Georgia, Illinois, Indiana, Michigan, New Jersey, New York, Oklahoma, and Wisconsin, filed a joint complaint intervening in the case that was initiated by a whistleblower. The case is captioned U.S. ex rel. Kester, et al. v. Novartis Pharmaceuticals Corporation, et al., No. 11-CIV-8196 (U.S.D.C. S.D.N.Y.).

In making the announcement Attorney General Gansler thanked Assistant Attorney General Jeremy Dykes and Auditor Ruth Jarrell, both from the Medicaid Fraud Control Unit, for their work on this case.

To read the complaint filed earlier this week visit:


Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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