Whistleblower Lawsuit Revived Against Novartis

By Jonathan Stempel

A U.S. appeals court on Friday revived a whistleblower lawsuit accusing Swiss drugmaker Novartis of paying illegal kickbacks to doctors to promote its multiple sclerosis drug Gilenya.

In a 3-0 decision, the 2nd U.S. Circuit Court of Appeals in Manhattan allowed whistleblower Steven Camburn to prove that Novartis violated the federal False Claims Act by holding "sham" speaker events to boost Gilenya sales.

Camburn, a former Novartis sales representative, claimed the drugmaker paid doctors thousands and treated them to dinners at high-end restaurants under the guise of educational events that were actually social. He alleged that this defrauded government health insurance programs like Medicare Part D, Medicaid, and TRICARE, as doctors and pharmacies submitted reimbursement claims for Gilenya influenced by kickbacks.

Circuit Judge Myrna Perez stated Camburn sufficiently alleged that Novartis hosted speaker events with few or no legitimate attendees, paid doctors excessively for canceled events, and selected speakers to encourage prescriptions, creating a "strong inference" of the drugmaker's intent to defraud.

Judge Perez agreed with seven other federal appeals courts that in whistleblower cases, violations occur when an aim of compensation is to induce purchases of federally reimbursable healthcare products.

Novartis and its attorneys did not respond to requests for comment. The False Claims Act allows whistleblowers to sue on behalf of the government and share in recoveries.

The recent decision overturned a September 2022 dismissal by U.S. District Judge Kimba Wood and returned the case to her, noting she properly dismissed some of Camburn's claims.

James Miller, Camburn's lawyer, expressed eagerness to address the "core allegations" in court. Camburn initiated the lawsuit against Novartis in May 2013, about 2-1/2 years after Gilenya's federal approval.

Gilenya sales have seen a decline due to competition from generics, falling to $925 million in 2023 from $3.22 billion in 2019, with $443 million in sales in the first nine months of 2024.

In 2020, Novartis agreed to pay more than $729 million to settle U.S. charges over illegal kickbacks to boost drug sales.

The case is US ex rel Camburn v. Novartis Pharmaceuticals Corp, 2nd U.S. Circuit Court of Appeals, No. 22-2708.