Tuesday, January 26, 2010

Novartis Says U.S. Unit to Pay Fine


Swiss drug giant Novartis AG said its U.S. subsidiary struck a plea agreement with U.S. investigators to resolve criminal allegations regarding the company's promotion of the epilepsy drug Trileptal, and agreed to pay a $185 million fine.

Federal investigators have been carrying out civil and criminal investigations of Novartis' marketing of the drug, including allegations that it promoted the drug for uses for which it is not approved by the Food and Drug Administration, an illegal practice known as "off-label" marketing, Novartis said in a statement Tuesday as it announced fourth-quarter results.

The investigations have also scrutinized "payments made to health-care providers in connection with this medicine," Novartis said. The company had previously disclosed the existence of the investigation, which is being led by the U.S. Attorney's Office for the Eastern District of Pennsylvania.

To resolve criminal allegations, Novartis said it agreed to plead guilty to a violation of the U.S. Food, Drug and Cosmetic Act, and to pay a fine of $185 million. This agreement is "contingent on court approval," Novartis said.

Separately, Novartis said it is still negotiating with the investigators "to resolve civil claims relating to Trileptal." In a sign that a civil settlement could be close, Novartis said it increased its provisions relating to the Trileptal investigations by $318 million in the fourth quarter, to a total of $397 million. It's not clear whether the total amount reserved includes the $185 million criminal fine.

Novartis said the same U.S. investigators are also probing "potential off-label marketing" and payments to health-care providers involving five other Novartis drugs: Diovan, Exforge, Sandostatin, Tekturna and Zelnorm. "Novartis is unable to assess with reasonable certainty the outcome of the investigation related to these five products or the amounts, which could be material, that it might be required to pay to resolve this investigation," it said in its statement.

A number of drug companies, including Pfizer Inc. and Eli Lilly & Co., have reached large settlements in recent months with U.S. investigators over marketing practices. AstraZeneca in September reached a preliminary agreement to pay $520 million to settle a U.S. investigation into its marketing of the schizophrenia drug Seroquel, including allegations the company promoted the drug "off-label."

Write to Jeanne Whalen at jeanne.whalen@wsj.com

Posted via web from Jack's posterous

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