US Bioservices Corp. has agreed to pay $13.4 million to resolve allegations that it engaged in a kickback scheme with Novartis to boost sales of Exjade, a blood iron treatment, in exchange for patient referrals and other benefits.

According to the U.S. Attorney’s Office in Manhattan, the resolution requires US Bioservices to pay approximately $10.6 million to the United States and nearly $3 million to settle state law and civil fraud claims related to the impact of the illegal kickback scheme on state Medicaid programs.

Acting U.S. Attorney Joon Kim alleged in a False Claims Act lawsuit that federal state health care programs were illegally billed for Exjade, and that US Bioservices had its nurses call patients to recommend they order prescription refills. Exjade can have serious adverse effects on a patient’s health, including kidney and liver failure and gastrointestinal bleeding, court documents said.

In previous lawsuits, the U.S. government sued Novartis and the two other specialty pharmacies that participated in the same Exjade kickback scheme. The government settled those lawsuits when Novartis agreed to pay $390 million and the other pharmacies involved collectively paid $75 million.

According to the U.S. Department of Justice, Novartis launched its Exjade kickback scheme in 2005 when it became concerned that many patients were discontinuing their use of the drug because they were worried about its serious, life-threatening side effects.

When Novartis gained FDA approval for Exjade, it created a closed distribution network that included US Bioservices and two other pharmaceutical providers, BioScrip and Accredo, which together dispensed most of the Exjade prescriptions in the U.S. Novartis was able to easily monitor and manipulate Exjade prescriptions sold through this small, limited network.

The scheme also gave Novartis more control over Exjade prescriptions by rewarding the distributor company that sold the most units of the drug with rebates, discounts, and other illegal kickbacks.

According to the federal government’s complaint, US Bioservices and Novartis entered into a kickback arrangement “pursuant to which [US Bioservices] was promised additional patient referrals and related benefits in return for refilling a higher percentage of Exjade than the two other pharmacies …”

“The integrity of the federal health care system requires that all providers, including pharmacies like US Bioservices, refrain from entering into kickback relationships,” said U.S. Attorney Joon. “When health care providers accept kickbacks, they violate the law, subject what should be health-based decision-making to the influence of profit-seeking drug manufacturers, and thereby put their own financial interests ahead of the interests of their patients. This Office will continue to use its law enforcement tools to pursue healthcare providers who accept kickbacks or otherwise put their profits ahead of patient safety.”

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Are you aware of fraud being committed against the federal government, or a state government? If so, you may be protected and rewarded for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower, please contact an attorney at Beasley Allen for a free and confidential evaluation of your claim. There is a contact form on this website, or you may email one of the lawyers on our whistleblower litigation team: Archie Grubb, Larry Golston, Lance Gould or Andrew Brashier.

Source: U.S. Department of Justice

Larry Golston, Beasley Allen Attorney
Larry Golston

Larry secured a $30 million whistleblower settlement involving issues of national security.

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