PharmaGossip: Novartis Pays $422.5 Million to Settle Illegal Marketing of Trileptal

The Swiss drug giant Novartis has agreed to pay $422.5 million to settle criminal and civil investigations into the marketing of the antiseizure medicine Trileptal and five other drugs, officials said on Thursday.

The action, including a guilty plea to a misdemeanor and a $185 million criminal fine and forfeiture by Novartis Pharmaceuticals, its United States subsidiary, was announced by the United States attorney in Philadelphia, which has specialized in health care fraud. This is the latest in a series of crackdowns by federal prosecutors and states that have been investigating pharmaceutical companies for illegally promoting drugs for uses not authorized by the Food and Drug Administration.

Federal prosecutors said Novartis illegally promoted Trileptal for neuropathic pain and bipolar disease, targeting psychiatrists and pain specialists who were known to use the drug off-label. Physicians are free to use any approved drug for any purpose, but companies are prohibited from promoting them for conditions not approved by the F.D.A.

The government accused Novartis of paying illegal kickbacks to health care professionals through speaker programs, advisory boards, entertainment, travel and meals. But aside from pleading guilty to one misdemeanor charge of mislabeling, which Novartis had announced in February and agreeing to pay the $185 million fine, the company denies any other wrongdoing.

In a statement, Novartis said it had cooperated with the investigations since 2005 and already corrected its promotional practices. Andy Wyss, president of Novartis Pharceuticals, said: “We are pleased to have reached resolution on this matter. N.P.C. will continue its commitment to high standards of ethical business conduct and regulatory compliance in the sale and marketing of our products.”

In its corporate filing last winter, Novartis said it was increasing reserves by $318 million in the fourth quarter, to a total of $397 million, to pay for pending settlements into past marketing practices of Trileptal.

Its stock fell by about 1 percent an hour before the 1 p.m. announcement in Philadelphia and was trading at $57.49, down 0.85 percent, at 2:10 p.m.

In the agreement settling other parts of the government investigation, Novartis paid $237.5 million to resolve allegations that it had caused illegal claims to be submitted for five other drugs but did not acknowledge any culpability.

They are Diovan, a hypertension drug that is the company’s top-selling product at $6 billion last year; Sandostatin, a drug to treat a growth hormone disorder that had $1.1 billion worldwide sales last year; Exforge, a hypertension drug that sold $671 million; Tekturna, a blood pressure medicine that sold $290 million; and Zelnorm, a medicine for irritable bowel syndrome and constipation.

Novartis joins a growing list of pharmaceutical companies that have settled government investigations into health care fraud in the past few years, including Pfizer, which paid $2.3 billion; Eli Lilly, $1.4 billion; Allergan, $600 million; AstraZeneca, $520 million; Bristol-Myers Squibb, $515 million. Pfizer, Lilly, Allergan and now Novartis pleaded guilty to misdemeanor crimes.

Novartis also signed a five-year corporate integrity agreement with the office of the inspector general at the Department of Health and Human Services.