For Immediate Release - October 01, 2010

AG Coakley's Office Recovers More Than $7.5 Million for Massachusetts Medicaid Program in Investigation of Pharmaceutical Manufacturer Novartis

BOSTON - Attorney General Martha Coakley's Office has reached a settlement with pharmaceutical manufacturer Novartis Pharmaceuticals Corporation to resolve allegations that the company improperly marketed the epilepsy drug Trileptal and five other products. Under the terms of the settlement, Novartis will pay $7,647,501.76 to the Massachusetts Medicaid Program, which provides funds for health care products and services for eligible low-income individuals, including elder citizens, children and people with disabilities.

The investigation focused on allegations that Novartis illegally promoted the sale and use of Trileptal for unapproved off-label conditions, such as bipolar disorder and neuropathic pain. Authorities also alleged Novartis paid illegal kickbacks to physicians to influence their prescribing practices and promote sales of Trileptal and other drugs in place of competitor products.

The Massachusetts recovery is part of a national settlement that will return more than $194 million to state Medicaid programs nationwide and an additional $43 million to other federally-funded health care programs.

"Pharmaceutical manufacturers must be held accountable for fraudulent and abusive practices that could put patients in danger," said AG Coakley. "We will continue to work in cooperation with federal and state officials nationwide to scrutinize marketing conduct in the pharmaceutical industry."

Novartis is an international pharmaceutical manufacturer headquartered in New Jersey and incorporated in Delaware. Novartis's Trileptal is one of a class of drugs known as anticonvulsants, and is FDA-approved for the treatment of partial seizures in patients who suffer from epilepsy. Today's settlement is based on four whistleblower lawsuits filed in federal courts in Pennsylvania, Florida and Alabama, which alleged that Novartis engaged in illegal off-label marketing conduct relating to Trileptal, and paid improper kickbacks to promote the sales of Trileptal and five other drugs: Diovan, Exforge and Tekturna (blood pressure medications); Zelnorm (formerly used in the treatment of Irritable Bowel Syndrome, and removed from the U.S. market in 2007); and Sandostatin (used in the treatment of acromegaly, a pituitary disorder).

Off-label prescribing of pharmaceutical products by physicians is a common practice and is not unlawful, but the U.S. Food, Drug and Cosmetic Act prohibits pharmaceutical manufacturers from promoting off-label uses of their products.

In addition to the civil settlements, Novartis has agreed to plead guilty to a misdemeanor misbranding violation of the U.S. Food, Drug and Cosmetic Act and to pay a $185 million criminal fine. Novartis has also agreed to the terms of a detailed and comprehensive Corporate Integrity Agreement (CIA) to be administered by the Office of Inspector General of the U.S. Department of Health and Human Services, under which its sales and marketing practices going forward will be strictly monitored.

The investigation was led by the United States Attorney's Office for the Eastern District of Pennsylvania, the United States Department of Justice, the Office of Inspector General of the U.S. Department of Health and Human Services, and a state investigative and negotiating team appointed by the National Association of Medicaid Fraud Control Units, an organization in which Attorney General Coakley's office plays a leadership role.

Since 2007, Attorney General Coakley's Office has recovered more than $173 million on behalf of the Commonwealth's Medicaid program.

The settlement was handled for the Commonwealth by Assistant Attorneys General George Zachos and Robert Patten and Data Analyst Anthony Megathlin of AG Coakley's Medicaid Fraud Division.