Originally published: March 15, 2014 7:41 PM
Updated: March 15, 2014 8:26 PM
By KATHLEEN KERR kathleen.kerr@newsday.com
An illuminated logo sits above windows at Novartis AG's headquarters in Basel, Switzerland, on Tuesday, July, 16, 2013. (Credit: Bloomberg / Gianluca Colla)
Dr. Howard Brand says he had one goal when he gave a speech at a Miami hotel in the early 2000s -- to tout the diabetes pill Starlix for the pharmaceutical company Novartis.
The giant Swiss drugmaker, which reported $57.9 billion in global sales in 2013, paid the Stony Brook endocrinologist $1,500 for his talk at a doctors' meeting, Brand said in an interview. Novartis also paid for Brand's airfare and his weekend hotel stay, he said.
"It was self-serving, but I also thought it was a benefit to patients," said Brand, who explained that his expenses-paid weekend in Florida helped other doctors learn how to use Starlix to treat patients.
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Between 2001 and 2011, federal prosecutors say, Novartis Pharmaceuticals showered 26,997 doctors -- including dozens from Long Island -- with money, free dinners and entertainment.
The payments to doctors across the country played a key role in what prosecutors allege was Novartis' $65 million illegal kickback scheme that steered unknowing patients to Starlix and two of its hypertension pills, Lotrel and Valturna.
Under the federal Anti-Kickback Statute, it is illegal for a drug company to pay doctors to induce them to write prescriptions for the company's drugs that are reimbursed by federal health care programs, prosecutors say.
"Novartis corrupted the prescription drug dispensing process with multimillion-dollar 'incentive' programs that targeted doctors who, in exchange for illegal kickbacks, steered patients toward its drugs," Manhattan U.S. Attorney Preet Bharara said after filing a 2013 lawsuit against the drugmaker.
Some patients developed serious side effects linked to Valturna -- prompting Novartis to pull the pill off the market in 2012.
Long Island served as a hotbed for the alleged scheme, according to the lawsuit, which also accuses Novartis of using doctors to help drive up drug sales.
New York has filed a separate lawsuit related to the federal action, which stems from a whistle-blower's lawsuit filed against Novartis in 2011 by a former sales representative for the company.
State Attorney General Eric T. Schneiderman estimated almost 5,000 New York doctors accepted money, free meals or entertainment from Novartis in the complaint that his office filed last August.
Schneiderman's lawsuit states the New York Medicaid program paid more than $34 million for prescriptions written by doctors who took part in the drugmaker's speakers program. As a result he is seeking damages from the drug company to compensate the state for Medicaid money allegedly lost in the scheme.
Andre Wyss, president of Novartis Pharmaceuticals Corp. -- a U.S. affiliate of Novartis AG, disputed the federal allegations in a statement to Newsday.
"We disagree with the way the government is characterizing our conduct in this matter and we stand behind our compliance program," said Wyss, who also is president of Novartis Corp. "Novartis Pharmaceuticals Corporation invests significant time and resources to help ensure we conduct our business in an ethical and responsible manner. We are committed to doing right."
Jerika Richardson, a spokeswoman for the U.S. attorney, said last week that Novartis is seeking dismissal of the government lawsuit. "The motion is now fully briefed and we're waiting for a decision by the court," Richardson said.
Ethical questions
Although the lawsuits target Novartis and not the doctors, Arthur Caplan, director of New York University's division of medical ethics, criticized the physicians' role.
"To even hear about it just takes my breath away," Caplan said. "It sounds like egregious, inexcusable violations of agreed upon legal and ethical standards . . . with an inexcusably complicit group of physicians," Caplan said.
In court papers, prosecutors gave the following account of the alleged scheme:
Novartis sales representatives would contact doctors and ask them to give speeches about the company's drugs. The drugmaker then would pay the doctors, supposedly for their speeches.
But the payments were really meant to induce doctors to boost the number of prescriptions they wrote for Novartis drugs, prosecutors say.
Novartis would pay doctors who gave speeches between $500 and $3,000. Doctors who simply attended speaking events or dinners often received money, too -- usually from $250 to $500.
Often, the speaking events resembled social hours without any speeches being given.
Across the country, Hooters restaurants, sports bars, and even an Alaskan salmon fishing lodge all served as venues for the speaking programs.
The government permits drugmakers to pay doctors to promote their drugs, but kickbacks are not allowed.
PhRMA, the Washington, D.C.-based organization that represents pharmaceutical manufacturers, has a code governing interactions by drugmakers with health care professionals.
The PhRMA code recommends that drugmakers provide only modest meals to doctors at educational events and that programs be held in venues conducive to "informational communication."
The code also calls for companies "to ensure that speaking arrangements are neither inducements nor rewards for prescribing a particular medicine or course of treatment."
Jeff Francer, PhRMA vice president and senior counsel, defended the general idea of doctors giving speeches for drugmakers but would not discuss the Novartis case.
"Practicing physicians can help improve patient care by educating their peers about their own experience using a company's medicines," Francer said.
Because the doctors boosted the number of prescriptions they wrote for Novartis drugs, prosecutors say, Medicare and Medicaid lost money when pharmacies billed them for millions of dollars in reimbursements.
Doctors in databases
Newsday identified doctors who took payments from Novartis using court papers and databases posted on the Novartis website. The databases do not detail payments made before 2010.
Novartis began posting the databases disclosing its payments to doctors as part of its settlement of a 2010 federal lawsuit accusing the company of making illegal payments to physicians through an earlier speakers program.
Brand, the Miami speaker, said in an interview that investigators had not approached him about the payments he accepted.
He said Novartis paid him a total of $10,000 to $12,000 for speeches, mostly at restaurant dinners it sponsored. The payments, which Brand said he received before 2010, are not reflected on the Novartis website.
"Even [with] the notion that we were paid solicitors, I think people really paid attention," he said. "Of course, a lot of doctors just enjoyed going to dinner."
Brand said he accepted more than $60,000 in speakers fees from drugmakers, including Novartis, in one two-year period. He said he has stopped giving such speeches. He said he wasn't an expert on Starlix, the diabetes pill that was the subject of his Miami talk, and couldn't recall its name until a Newsday reporter reminded him.
Novartis trained him how to speak about Starlix using a slide presentation. After training, Brand said, "We would then go out and show some of the slides we had been shown."
He said he spoke mostly to groups of three to 12 doctors in Suffolk County. "I was overexposed pretty quickly," Brand said, explaining Novartis kept inviting the same doctors to dinner to hear his talks.
Josephine Johnston, director of research at The Hastings Center, a bioethics think tank in upstate Garrison, said doctors who accept payments from drugmakers for doing promotional work create conflicts of interest for themselves.
The conflicts are between a "patient's interest and being prescribed a treatment that is right for them and your interest in taking money from the pharmaceutical company," Johnston said.
RXs said to be tracked
Sales representatives for Novartis and other pharmaceutical companies would use computers to track the number of prescriptions its paid speakers were writing for patients, Brand said.
Dr. Adriane Fugh-Berman, director of PharmedOut -- a Georgetown University Medical Center project that educates doctors about the influence of drugmakers -- explained how prescription tracking works in a 2008 article in the Journal of General Internal Medicine.
Health information organizations can legally buy prescription records from pharmacies and collect anonymous information about personal medical records from insurance companies, Fugh-Berman said.
Patients' names are deleted from the data, but doctors' names remain.
Brand said drug sales reps would drive him to and from speaking engagements at prominent restaurants like Casa Rustica and Mirabelle in Suffolk County. He said while he was in the car, the Novartis reps would discuss how often Long Island doctors, including himself, were prescribing the company's drugs.
"I was always surprised that the representatives knew exactly what I prescribed in a given week," Brand said. He said he made speeches about drugs for several pharmaceutical companies besides Novartis.
Sales reps for the other companies would name "losers of the week" when doctors let their prescription writing numbers slip, Brand said.
At least once, a company named Brand a loser, he said. He wouldn't identify the drugmaker.
Another physician, Dr. Michael Shanik, a Smithtown endocrinologist, acknowledged accepting thousands of dollars from Novartis between 2010 and 2012 -- mostly for giving speeches.
The Novartis databases show the payments to Shanik totaled about $30,000. "Yes, I was a speaker for them," Shanik said when reached by phone at his office. He would not elaborate and ended the conversation.
Dr. Howard Hertz, a Babylon internist, confirmed that he had received $4,000 from Novartis in 2010 and 2011 for talking about its hypertension drugs to colleagues. Hertz said he dealt with a Novartis sales rep who brought information about the company's pills to his office. "He would educate me about the product, give me slides to study," he said.
Hertz said the slides were on CDs and made him an expert on Novartis drugs such as Diovan, a blood pressure pill, Lotrel and Valturna. He said he spoke mostly about Diovan and Lotrel.
"We had dinners whereby I would speak about the products and speak to the colleagues," Hertz said. "I became somewhat of an expert in these products."
Hertz said his participation "was honorable and I certainly didn't do anything wrong."
Eric Young, a Philadelphia attorney representing the whistle-blower who spurred the government lawsuit, did not return repeated calls for comment. The whistle-blower, Oswald Bilotta, a former Novartis sales representative who once lived in Miller Place, could not be reached.
Even as doctors and sales reps were busy drumming up sales of Valturna, Novartis began receiving reports that it had side effects.
Patients had reported serious kidney problems and the FDA warned it should not be used by people with diabetes.
Novartis kept promoting Valturna, until 2012, when it pulled the pill off the market, citing concerns about patients who developed kidney problems or low blood pressure while using it.
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