By Jonathan Stempel
NEW YORK (Reuters) -A U.S. appeals court on Friday revived a whistleblower lawsuit accusing Swiss drugmaker Novartis (SIX:NOVN) of paying illegal kickbacks to doctors to induce them to promote its blockbuster multiple sclerosis drug Gilenya.
In a 3-0 decision, the 2nd U.S. Circuit Court of Appeals in Manhattan said the whistleblower Steven Camburn can try 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, said the drugmaker paid doctors thousands of dollars and treated them to dinners at high-end restaurants to speak at purportedly educational events that were actually social in nature.
He said this caused government health insurance programs including Medicare Part D, Medicaid and TRICARE to be defrauded when doctors and pharmacies submitted reimbursement claims for Gilenya that were tainted by kickbacks.
Circuit Judge Myrna Perez said Camburn sufficiently alleged that Novartis holding speaker events with few or no legitimate attendees, paying doctors excessively for canceled events, and selecting speakers to encourage prescription writing created a “strong inference” the drugmaker intended to induce fraud.
She agreed with seven other federal appeals courts that in whistleblower cases, defendants violate the federal Anti-Kickback Statute when at least one purpose of their compensation is to induce purchases of federally reimbursable healthcare products.
Novartis and its lawyers did not respond to requests for comment.
The False Claims Act lets whistleblowers sue on behalf of the government, and share in recoveries.
Friday’s decision vacated a September 2022 dismissal by U.S. District Judge Kimba Wood in Manhattan, and returned the case to her. It said Wood properly dismissed some of Camburn’s claims.
James Miller, a lawyer for Camburn, said he looked forward to addressing his client’s “core allegations” in court.
Camburn sued Novartis in May 2013, about 2-1/2 years after Gilenya won federal regulatory approval.
Gilenya sales have been declining because of competition from generic versions.
Sales fell to $925 million in 2023 from $3.22 billion in 2019, and totaled $443 million in the first nine months of 2024.
Novartis agreed in 2020 to pay more than $729 million to settle U.S. government charges it paid illegal kickbacks to doctors and patients 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.
