Novartis issued a “clarification” Tuesday on comments attributed to its CEO, who was quoted as saying a $390 million settlement with the government wouldn't necessarily change the company's future behavior.
The settlement, which must still be finalized, would resolve allegations that Novartis paid kickbacks in the form of rebates to specialty pharmacies to push its drugs.
"Novartis is pursuing a mutually acceptable resolution of this litigation because we believe that is in the best interest of the company and the patients we serve," Novartis said in a statement. "We continue to believe that specialty pharmacies play a key role in patient adherence and support. We remain committed to conducting our business in an ethical and compliant manner.”
But the Wall Street Journal reported Tuesday that CEO Joseph Jimenez said the rebates were designed to help specialty pharmacies ensure patients completed their courses of medication. The Journal quoted Jimenez as calling the practice “quite common” and saying that Novartis still used it at specialty pharmacies.
“We continue to maintain that specialty pharmacies must continue to play a role in ensuring patient adherence,” Jimenez said, according to the Journal. “How that is going to play out as to whether we change our behavior or not remains to be seen.”
Novartis didn't wait long to release a follow-up statement.
The Novartis statement didn't specifically cite that comment reported in the Journal. But the Novartis clarification said, “Some media coverage did not accurately reflect our position and the seriousness of the company's commitment (in) working with the government to ensure our behaviors and interactions with specialty pharmacies meet the highest ethical standards.”
Novartis said the final settlement would include “detailed admissions of fact” regarding the government's allegations.
“Any reports suggesting that we are not addressing the government's concerns or the particular issues on which the litigation focused was not intended by the company,” according to Novartis.
A Novartis spokesman said Wednesday in an e-mail, "We issued the statement following publication of articles including quotes from Mr. Jimenez, which in the context that they were placed and published could be misconstrued by readers to not correctly reflect the commitment and intentions of the company to conduct its business in a fully compliant and lawful manner."
Patrick Burns, co-director of the Taxpayers Against Fraud Education Fund, a not-for-profit funded by whistle-blowers and law firms that represent them, said he remains skeptical of the company's intentions.
Burns said Jimenez's original statements smack of disrespect for the U.S. Justice Department and the U.S. attorney general.
“It's a level of arrogance and ignorance which is jaw-dropping,” Burns said. “You have the CEO coming out and brazenly saying we will not even change our practice. I think this really is the time for the attorney general to show her teeth.”
Burns said the financial penalty in this case didn't seem to be enough to fix the problem. He believes the government needs to begin excluding executives such as Jimenez from federal healthcare programs in order to better get its message across that such behavior won't be tolerated.
Before the settlement agreement, the federal government had been seeking as much as $3.3 billion in damages from the drugmaker.
In court documents, Novartis denied violating the False Claims Act and paying illegal kickbacks to pharmacies.
The settlement agreement Novartis announced Tuesday came out of allegations originally brought by a whistle-blower. In False Claims Act cases such as this one, whistle-blowers are entitled to a percentage of whatever money the government is able to recover.