Life Science Compliance Update

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May 05, 2017

Novo Nordisk Settles Qui Tam Suit

Novonordisk

Novo Nordisk is in the midst of settling a whistleblower lawsuit that alleges that the company ran a “white-coat marketing scheme” to pump up sales of NovoLog, Victoza, and Levemir. The complaint was recently unsealed as part of the settlement process and alleges that Novo Nordisk partnered up with a clinical education company, Healthstar’s PT, to set up a program – “Changing Life with Diabetes” – which hired and trained certified diabetes educators.

The whistleblowers, two former managers, claim that since 2006, Novo ran the program to gain access to physician practices, where the educators would provide thousands of dollars worth of educational programs and materials, including: free patient education and seminars; free in-office training; free Novo-branded log books to give patients; and unlimited access to “go to” diabetes experts for patients.

The lawsuit alleges that Novo Nordisk attempted to bypass rules established by the U.S. Food and Drug Administration (FDA) regarding promotional materials and communications from sales professionals. The lawsuit said that the value of having a diabetes educator calling on a doctor “cannot be understated” because they provide materials and education that could cost doctors thousands of dollars. The suit further claims that because the certified diabetes educators were not titled as sales representatives, they received unprecedented access to physicians. However, “they were sales representatives in every way except title.”

Allegedly, the program was meant to induce prescribers to write prescriptions for Novo’s diabetes medications, and the educators would develop a close bond with doctors (closer than the bond sales representatives can forge) and sales of the drugs were “extraordinarily” boosted because of the program.

According to the complaint, the three drugs involved made Novo Nordisk $6 billion in sales in 2013, making up ten percent of the company’s worldwide sales for the year.

A spokesman for the company stated that the company “reached an agreement in principle to settle certain claims related to this investigation,” further noting that the company denies “the allegations, and highly value the role our diabetes educators serve in helping [health care providers] better understand diabetes and patient care. The process is not finalized, and as such as we can’t provide further comment to this matter at this time.”

This isn’t the first time Novo Nordisk has been penalized in the United States for kickback schemes. In 2009, the company paid an $18 million fine in connection with $1.4 million in illegal kickbacks paid to the former Iraqi government following the Department of Justice’s investigation into the U.N. Oil-for-Food program. According to a Justice Department statement “between 2001 and 2003, Novo paid approximately $1.4 million to the former Iraqi government by inflating the price of contracts by 10 percent before submitting the contracts to the United Nations for approval and concealed from the United Nations the fact that the price contained a kickback to the former Iraqi government. Novo also admitted it inaccurately recorded the kickback payments as "commissions" in its books and records.”

For a more in-depth review of this case and implications on the life sciences industry, please see the June issue of our sister publication, Life Science Compliance Update.

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