U.S. Records in Novartis Case Face Exposure Yet

MANHATTAN (CN) - A discovery tactic by Novartis as it fights claims that it paid kickbacks to doctors drew skepticism from a federal magistrate, but the drugmaker may yet find relief in its quest for government documents.

Three years ago, a whistle-blower accused Novartis of pushing pharmacies to switch transplant patients on cheaper generics to its Myfortic drug. The U.S. government and 27 states joined the federal action last year.

Denying the allegations, Novartis likened its alleged kickbacks to Medicaid's program rewarding "adherence," medical parlance for encouraging patients suffering from chronic conditions to finish their prescriptions just as the doctors ordered.

Medical authorities have long recommended this practice to promote long-term health, and in some cases prevent the spread of disease.

U.S. Magistrate Judge James Francis scoffed Monday, however, at the parallel Novartis tried to draw between this recommendation and its alleged pay-to-prescribe scheme.

The distinction between "an improper inducement" and a "proper incentive" is "not found in the statute or the regulations," the 27-page opinion states.

And the government's "adherence initiatives or treatment protocols cannot be relevant to Novartis' liability under the anti-kickback statute because the government is fundamentally different from a pharmaceutical company like the defendant," Francis wrote.

Unlike Novartis, "the government is not providing value to a person or entity that is 'in a position to generate business' for it," Francis added.

"Thus, its own initiatives shed no light on the appropriateness or legality of the schemes at issue here," the opinion states.

Novartis might still be able to cast a wide net for government documents, however, because of the unjust-enrichment claims it also faces, Francis said.

Unlike the anti-kickback statute, this statute is "not narrowly centered on false claims and remuneration for recommendations and referrals, but instead examines the overall fairness of a transaction," the opinion states.

"This widened focus expands the universe of relevant information," Francis wrote.

The magistrate ordered the federal and state governments either to drop this claim, or reach a discovery arrangement with Novartis within the next two weeks.

Novartis is "disappointed" with the decision, a spokeswoman said.

"NPC continues to dispute the allegations and will continue to vigorously defend itself in this litigation," the company's statement says.

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