United States ex rel. Bilotta v. Novartis Pharm. Corp.
| Decision Date | 30 September 2014 |
| Docket Number | No. 11 Civ. 0071PGG.,11 Civ. 0071PGG. |
| Citation | 50 F.Supp.3d 497 |
| Parties | UNITED STATES, et al. ex rel. Oswald BILOTTA, Plaintiffs and Relator, v. NOVARTIS PHARMACEUTICALS CORPORATION, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Evan R. Chesler, Benjamin Gruenstein, Rachel G. Skaistis, Timothy Gray Cameron, Cravath, Swaine & Moore LLP, Manvin Singh Mayell, Michael A. Rogoff, Kaye Scholer LLP, New York, NY, Nina M. Dillon, Cravath, Swaine & Moore LLP, Brooklyn, NY, for Defendant.
In this qui tam action, Relator Oswald Bilotta alleges that Defendant Novartis Pharmaceuticals Corporation (“Novartis”) violated the False Claims Act (“FCA”), 31 U.S.C. §§ 3729(a)(1)(A)-(B) and related state laws by (1) causing false claims for reimbursement for patient prescriptions—that were written in exchange for kickbacks in violation of the Anti–Kickback Statute, 42 U.S.C. § 1320a–7b and related state laws—to be submitted to federal and state health care programs (“the kickback claims”); and (2) promoting the drug Valturna for off-label use, thereby causing the submission of false claims to federal and state health care programs (“the off-label promotion claims”).1 The United States (the “Government”) and the State of New York (collectively, the “Government Entities” or “Plaintiffs”) have intervened as to the kickback claims.
Novartis has moved to dismiss the Government's Amended Complaint–in–Intervention, New York's Complaint–in–Intervention, and the Relator's Third Amended Complaint. For the reasons stated below, Novartis's motions will be denied in part and granted in part.
Plaintiffs allege that from January 2002 through at least November 2011, Novartis systematically bribed doctors to induce them to prescribe drugs from Novartis's cardiovascular division for their patients. (See U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 1, 66; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 2, 3, 57) These drugs include Lotrel
, Exforge HCT, Valturna, Tekamlo, and Starlix.3 (See U.S. Am. Cmplt. (Dkt. No. 62) ¶ 66; N.Y. Cmplt. (Dkt. No. 61) ¶ 57) Novartis sold these drugs through a network of sales representatives who met with health care professionals throughout the United States. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 67; N.Y. Cmplt. (Dkt. No. 61) ¶ 58)
Novartis induced doctors to prescribe these drugs primarily through the use of “sham” speaker events. (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 1–3; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 2–4) According to Novartis's internal policies, speaker events were intended to be educational programs; Novartis would pay doctors to educate other doctors and health care professionals about Novartis drugs by presenting slides prepared by Novartis. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 2; N.Y. Cmplt. (Dkt. No. 61) ¶ 4) These events were organized and conducted by Novartis sales representatives. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 72; N.Y. Cmplt. (Dkt. No. 61) ¶ 69) They chose the speaker, topic, and venue for the events, as well as the attendees. (See U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 72–73, 81; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 6, 69)
Novartis held thousands of speaker events at which few or no slides were shown, however, and at which the attendees spent little or no time discussing the drugs that were allegedly the focus of the programs. (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 2, 95; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 4, 82) These events thus served as little more than upscale social outings designed to induce doctors to write prescriptions for Novartis drugs. (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 1, 77, 121, 135–36; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 2, 4, 82, 86–87)
According to Plaintiffs, the sham nature of these events was apparent from the attendees, speakers, subject matter, and venues. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 95; N.Y. Cmplt. (Dkt. No. 61) ¶ 82) Frequently, groups of the same doctors would repeatedly attend speaker events on the same topic within a short period of time, with the doctors taking turns in the roles of attendees and “speakers.” (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 95–120, 126; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 82–85) For example, one doctor attended the same presentation ten times between July 2010 and October 2011, and the same three doctors were consistently present at nine of those events. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 97; N.Y. Cmplt. (Dkt. No. 61) ¶ 84) Moreover, Novartis hosted many of its speaker events at high-end restaurants or sports bars without private rooms, making it difficult or impossible to hear the speaker or show slides; it was common for no slides to be shown at such events. (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 121, 125–28, 130, 133–34; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 86–90) Other venues were similarly inappropriate for the types of “educational” events that Novartis purported to be hosting, such as “round table” programs at Hooters restaurants and fishing trips. (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 122–24)
Sales representatives frequently asked speakers who they should invite as attendees to these events, and doctors used this as an opportunity to invite their friends. (Id. ¶ 136; N.Y. Cmplt. (Dkt. No. 61) ¶ 91) Often the drug that was supposed to be the subject of the speaker program was never discussed. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 137; N.Y. Cmplt. (Dkt. No. 61) ¶ 92)
The doctors who Novartis designated as “speakers” for these events were paid “honoraria” by Novartis, even though they spent little or no time discussing the drugs that were supposedly the subject of the programs. (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 3, 78; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 4, 92) “Speakers” were paid between $750 and $1500 for each event, with some speakers being paid as much as $3000. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 79; N.Y. Cmplt. (Dkt. No. 61) ¶ 67) In some instances, speaker events reflected in Novartis records never took place, or doctors recorded as attending were not, in fact, present; nevertheless, the designated “speakers” were compensated for these non-existent events. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 138–44; N.Y. Cmplt. (Dkt. No. 61) ¶ 93)
Novartis's internal analysis showed that its speaker programs had a high “return on investment,” as doctors who attended the events—as either speakers or attendees—wrote an increased number of prescriptions for Novartis drugs. (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 3, 145–48; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 94–96) Novartis found that the more incentives doctors received in the form of meals, entertainment, and honoraria from these events, the more Novartis prescriptions the doctors would write. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 147; N.Y. Cmplt. (Dkt. No. 61) ¶ 95) The highest return on investment came from doctors who were paid to “speak” at the events. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 3) Novartis considered its speaker programs to be a “key component of [Novartis's] promotional activities aimed at increasing its sales of drugs” from 2002 to at least 2011. (Id. ¶ 71; N.Y. Cmplt. (Dkt. No. 61) ¶ 61) Novartis spent more than $65 million for more than 38,000 speaker programs ostensibly about Lotrel
, Starlix, and Valturna between January 1, 2002 and November 2011. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 71; N.Y. Cmplt. (Dkt. No. 61) ¶ 61)
Novartis intended its speaker programs to increase prescription-writing, and doctors knew this. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 147–50; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 97–99) Doctors were chosen to be speakers if they wrote a high number of prescriptions for Novartis cardiovascular division drags, and they had to maintain or increase that level of prescription-writing in order to be invited to appear as a “speaker” again. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 149; N.Y. Cmplt. (Dkt. No. 61) ¶ 98) Accordingly, once they began receiving honoraria, many doctors significantly increased the number of prescriptions that they wrote for Novartis drugs, or started prescribing Novartis drags if they had not done so before. (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 150–58; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 99–124) Doctors often continued to increase their prescription-writing as the amount of honoraria they received increased. (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 150–58; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 99–124) Novartis placed no limit on the number of programs a doctor could attend or how often a doctor could attend the same program. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 84; N.Y. Cmplt. (Dkt. No. 61) ¶ 71)
Novartis also encouraged sham events by creating incentives for its sales representatives to host them. Sales representatives in the cardiovascular division were compensated based upon the number of prescriptions that doctors wrote for Novartis drugs. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 75; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 6, 64) They were given budgets to use on speaker events, and they were pressured to exhaust their budgets for such events.
(U.S. Am. Cmplt. (Dkt. No. 62) ¶ 76) Although Novartis policies provided for caps on the price per meal for attendees at these events, sales representatives could avoid these caps by attributing costs that exceeded the caps to “unmet minimums,” i.e., the difference between a restaurant's minimum spending requirement for an event and the amount that sales representatives were permitted to spend per attendee under the caps. (Id. ¶¶ 87–88; N.Y. Cmplt. (Dkt. No. 61) ¶¶ 74–75) By inviting few attendees and attributing the excess to a restaurant's “unmet minimum” cost, speakers could spend lavishly on food and alcohol well beyond the caps. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 88; N.Y. Cmplt. (Dkt. No. 61) ¶ 75) Accordingly, spending for dinners frequently exceeded the caps, with hundreds of dollars being spent on each individual attendee's meal. (U.S. Am. Cmplt. (Dkt. No. 62) ¶¶ 88, 130–32; see N.Y. Cmplt. (Dkt. No. 61) ¶ 75)
Novartis also turned a blind eye as to whether its speaker programs were being used for illegitimate purposes. (U.S. Am. Cmplt. (Dkt. No. 62) ¶ 5; N.Y. Cmplt. ...
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