NEW YORK (Reuters) – Novartis AG (NOVN.S) agreed to pay $678 million to settle a civil fraud lawsuit brought by the U.S. government accusing the Swiss drugmaker of paying millions of dollars in kickbacks to doctors to induce them to prescribe its cardiovascular and diabetes drugs.
The U.S. Department of Justice announced the settlement late on Wednesday to resolve charges that Novartis violated the federal False Claims Act and an anti-kickback statute.
Novartis was accused of organizing tens of thousands of sham educational events where it provided doctors with exorbitant speaker fees, lavish dinners and expensive alcohol to induce more prescriptions.
Acting U.S. Attorney Audrey Strauss in Manhattan called the incentives “nothing more than bribes,” and said federal healthcare programs paid hundreds of millions of dollars in reimbursements for the tainted prescriptions.
“Giving these cash payments and other lavish goodies interferes with the duty of doctors to choose the best treatment for their patients and increases drug costs for everyone,” Strauss said in a statement.
Novartis admitted and accepted responsibility for many of the allegations and agreed to scale back its speaker programs.
The payout includes $591.4 million to the U.S. government as damages under the False Claims Act, a $38.4 million forfeiture for violating the anti-kickback statute, and $48.2 million to various U.S. states, the Justice Department said.
Reporting by Jonathan Stempel in New York; Editing by Sandra Maler and Leslie Adler