Specialty pharmacy Accredo Health Group Inc. will pay $14.9 million to settle state regulators’ claims it participated in a patient referral kickback scheme with Novartis Pharmaceutical Corp. This is in addition to a $45 million settlement with federal authorities revealed in late April. Accredo also agreed to cooperate with federal attorneys’ prosecution of claims against Novartis.
The whistleblower suit alleged Novartis had offered performance rebates or discounts to pharmacies that encouraged the use of its iron reduction drug Exjade and organ transplant medication Myfortic. The U.S. government intervened last month in relator David Kester’s claims against Accredo for the purpose of the settlement.
The government says Accredo violated the False Claims Act and the Anti-Kickback Statute from March 2008 to March 2012 through an Exjade patient referral allocation scheme. U.S. Attorney Preet Bharara said in a statement that Accredo’s $60 million settlement was substantial. He stated in the release:
Novartis used Accredo to promote refills under the guise of purported ‘counseling’ and ‘education,’ and in doing so, Novartis caused patients to receive one-sided advice that did not discuss Exjade’s serious, potentially life-threatening, side effects. This settlement with Accredo restores to the public tens of millions of dollars paid out for kickback-tainted drugs.
Scott J. Lampert, special agent in charge of the U.S. Department of Health and Human Services, Office of Inspector General’s New York Regional Office, added:
The conduct displayed by Accredo compromised patient care and undermined the integrity of our nation’s health care programs. This settlement should serve as a warning to all providers that choose to let financial inducements cloud their medical judgment.
Kester, a former Novartis employee, filed the suit under seal in 2011. Accredo would receive additional patient referrals and related benefits from Novartis in exchange for increasing refill percentages of Exjade patients at more than two other specialty pharmacies participating in a Novartis program known as EPASS.
It was said that Novartis could direct which of the specialty pharmacies would receive patient prescription referrals not designated by insurance requirements or physician preference, the settlement said. The government previously intervened in Kester’s claims against Novartis concerning an alleged kickback scheme involving Novartis and co-defendant BioScrip Inc., prompting the court to unseal the case in 2013.
Prosecutors have said the scheme cost Medicare and Medicaid tens of millions of dollars in improper reimbursements. BioScrip agreed to pay $15 million to exit the suit in January 2014, including paying $11.7 million to the federal government settle claims that its distribution of Exjade through its legacy specialty pharmacy operations violated the FCA and the Anti-Kickback Statute.
The court rejected Novartis’ attempt to get the suit dismissed early on, but the company did get FCA allegations concerning several other drugs thrown out. Several pharmacies settled or were dropped from the suit.
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