Attorney General Bob Ferguson today filed a motion to intervene in a civil lawsuit against Novartis Pharmaceuticals Corporation.
The suit alleges Novartis paid kickbacks to BioScrip, Inc., a pharmacy headquartered in New York, to boost sales of Novartis’ drug, Exjade. Exjade was approved by the Food and Drug Administration in late 2005 for the treatment of chronic iron overload due to blood transfusions.
Washington announced its settlement with BioScrip earlier this month. BioScrip agreed to pay $15 million to the federal government and state governments to resolve Medicaid and Medicare claims related to the scheme.
Washington’s total share of the settlement was roughly $98,000 with nearly $43,000 returning directly to the state Medicaid program and the remainder returning to the federal government for its share of Washington’s Medicaid program. The federal government matches state funds to support the Medicaid program in Washington.
Washington was one of the six states leading the BioScrip settlement negotiations.
“When companies don’t play by the rules, they put valuable Medicaid dollars at risk,” Ferguson said. “Washington and other states want these companies to know we are paying attention and will fight vigorously for the vulnerable patients they serve.”
Washington joins New York and eight other states that announced they were intervening in the lawsuit against Novartis when the case was unsealed on Jan. 8, 2013. California has also intervened.
Kickbacks provided to promote drug, downplay side effects
The lawsuit alleges Novartis launched its kickback scheme in 2007, when it became concerned that patients were discontinuing use of Exjade because of side effects.
The government alleges Novartis provided the kickbacks to induce BioScrip to try to keep patients on the drug as long as possible. The states further contend that BioScrip employees made thousands of phone calls to Exjade patients and downplayed the side effects of the drug.
Small network distributed drug creating intense competition
Until 2012, when it sold most of its pharmacy business, BioScrip operated a specialty pharmacy that shipped prescription drugs to Medicaid patients around the country.
When Novartis launched Exjade, it created a closed distribution network, including BioScrip and two other specialty pharmacies selected by Novartis, to fill most prescriptions of the drug in the U.S.
Novartis controlled which pharmacies filled many of the prescriptions for Exjade through this small network. The civil lawsuit against Novartis alleges the company used its control of Exjade prescriptions as well as various rebates and discounts to pay kickbacks to BioScrip.
Novartis used Exjade Scorecard to refer additional patients to pharmacies
The state-federal investigation found Novartis created an ‘Exjade Scorecard’ to measure how long patients took Exjade. Novartis used this scorecard to refer more new patients to the pharmacy that kept patients on the drug the longest.
BioScrip often won this competition and received valuable new patient referrals as a result. A former BioScrip supervisor stated under oath that this competition and the rebates provided by Novartis “caused [BioScrip] to be focused exclusively on the number of orders and refill rates, rather than on patient care.”
Case originated with whistleblower
The case was initiated by a whistleblower, under the New York’s False Claims
Act and other state statutes. That case is captioned U.S. ex rel. Kester, et al. v. Novartis Pharmaceuticals Corporation, et al., No. 11-CIV-8196 (U.S.D.C. S.D.N.Y.).
