Novartis AG is a pharmaceutical corporation based in Basel, Switzerland. It is one of the biggest health care companies in the world, focusing on the innovation, development, manufacture, and marketing of pharmaceutical products. In 1996, the Ciba-Geigy and Sandoz companies merged their pharmaceutical and agrochemical divisions to form Novartis. The company is a leading medical provider for treating cardiovascular diseases, cancer, neurological disorders, respiratory diseases, dermatological conditions, and immune diseases, among many more. Novartis Pharmaceuticals and Novartis Oncology are part of its Innovative Medicines division. Novartis operates through subsidiaries across Europe, America, the Middle East, Asia, and Asia-Pacific.
Like many other multi-million dollar companies, Novartis has faced numerous lawsuits and have spent over $1 billion in lawsuit settlements over the years. From Patent infringements and civil fraud suits to being sued for not paying its workers enough, Novartis has had its fair share of legal battles. Below is a list of 10 of the most significant lawsuits the company has faced.
10. United States ex rel. Galmines v. Novartis Pharm. Corp. (False Claims Act violations from illegal marketing of Elidel) – $35 Million
In 2006, a case was filed against Novartis by a former employee turned whistleblower for the off-label marketing of the Elidel cream. The FDA approved Elidel cream for eczema treatment in patients older than two years for short time use only. In the lawsuit, Donald Galmines alleged that Norvatis instructed sales representatives to tell doctors that Elidel was a safe treatment for infants. Novartis was trying to widen the market for Elidel to include children below 24 months even though the FDA had not approved it for use on infants. Galmines also alleged that Novartis had organized and invited physicians to dinner parties and conferences where the company advocated off-label use of Elidel, violating federal and state kickback laws.
In 2016, Novartis agreed to pay $35 Million to settle the lawsuit. In the Settlement agreement, the U.S government received $30.5 Million while participating states received a $4.4 Million settlement. Donald Galmines received $8.8 Million from the state as part of the settlement for being a whistleblower.
9. United States v. Novartis (False Claim allegations from illegal marketing of TOBI) – $72.5 Million
In 2010, Novartis agreed to pay $72.5 Million in settlements to resolve a civil lawsuit claiming it violated the False Claims Act in marketing its cystic fibrosis drug TOBI. The lawsuit was filed by three whistleblowers who were former Novartis employees. The suit alleged that between 2001 and 2006, Novartis and Chiron Corp, which Novartis acquired, had made false claims submitted to the federal health care programs for specific off-label uses of TOBI. The FDA had approved TOBI, which was an inhaled antibiotic, for the treatment of certain patients with cystic fibrosis. The lawsuit alleged that the companies marketed the drug for other unapproved uses, like for diseases other than cystic fibrosis and for patients who did not meet the parameters of the approved FDA indication for the use of TOBI.
According to the government, the conduct of Novartis caused the submission of false claims to its federal health care programs. Pharm Letter, stated that the U.S government received $43.5 Million as a criminal fine for federal claims, $29 Million went to various states, and the whistleblowers received $7.8 Million.
8. The Novartis Wage and Hour Litigation. (Wage and Hour Class Action Lawsuit) – $99 Million
In 2006, Novartis was sued by some of its sales representatives over wage and hour claims. In the lawsuit, the employees claimed to have been denied overtime pay even though they had worked more than 40 hours a week. Pharmaceutical Representatives are usually tasked with visiting health institutions and doctors to provide information about the company’s drugs to convince the doctors to prescribe the drugs to patients. They can give information about drugs and clinical studies, answer questions about said drugs and leave samples. However, they are not allowed to sell the drugs to doctors as that would be illegal. These jobs can be challenging and consist of long days in the field and sometimes even working in the evening.
In the lawsuit, the plaintiffs claimed they worked very long hours every day and sometimes would spend their evenings at work events and not take lunch breaks. However, like other pharmaceutical companies in the industry, Novartis treated them as exempt from the overtime pay requirements stipulated in the Fair Labor Standards Act (FLSA). In July 2010, a ruling was made by the U.S Circuit Court of Appeals in New York that workers qualified for overtime under the FLSA. In January 2016, Novartis agreed to a $99 Million settlement for over 7,700 plaintiffs who had joined the class action suit.
7. Plexxikon Inc. v. Novartis Pharm. Corp. (Patent Infringement) – $178 Million
Plexxikon Inc., a company owned by Daiichi Sankyo, filed a lawsuit against Novartis Pharmaceuticals in 2017 for patent infringement. Plexxikon is an American company involved in the discovery of drugs. In the lawsuit, Plexxikon accused Novartis of infringing on two drug patents developed for its cancer treatment drug Zelboraf. The GlaxoSmithKline company also used the compounds to make the Melanoma therapy drug, Tafinlar. In 2015, GSK traded Tafinlar along with other cancer assets to Novartis. In its defense, Novartis claimed that the patents held by Plexxikon were invalid, citing that there were three GSK compounds in the Tafinlar drug that came before the patents.
Unfortunately for Novartis, they failed to convince the jury that they did not infringe on Plexxikon’s patents. In 2021, the federal jury ruled in favor of Plexxikon Inc. and awarded the company $178 Million in damages. According to FiercePharma, Plexxikon would also be receiving royalty payments from any future sales proceeds from Tafinlar.
6. The Sandoz Price Fixing lawsuit – $195 Million
Four counts of felony charges were filed against Sandoz, a subsidiary of Novartis that produces generic drugs for the company, for participating in criminal antitrust conspiracies. According to Policy Med, the first count was conspiring with a New York-based company to fix the prices of Clobetasol, Deonide ointment and Nystatin triamcinolone cream. The second count was for conspiring with Kavod Pharmaceuticals to fix the prices of Benazepril HCTZ.
The third and fourth counts were for conspiring with a Michigan generic drug company and another generic drug company based in Pennsylvania to fix the prices of drugs, including Desonide ointment and Tobramycin Solution. Sandoz admitted to its participation in the four charges and agreed to pay a criminal fine of $195 million. The Novartis subsidy entered a deferred prosecution agreement, and Sandoz agreed to cooperate with the antitrust investigations.
5. Amy Velez v. Novartis Pharm. Corp. (Gender Discrimination Class Action Suit) – $250 Million
In 2007, Amy Velez and a group of 19 women working for Novartis and some former employees filed a class action lawsuit against Novartis for gender discrimination. According to the Case text, the lawsuit claimed that the Novartis Pharmaceutical Corporation discriminated against them in several ways, including not giving them proper compensation, not offering women promotions, and promotional opportunities equal to their male colleagues, negative personal evaluations and by mistreatment of female employees who sought maternity leave. The lawsuit sought injunctive relief, back and front pay, and compensatory and punitive damages. By the end of the trial period, over 5,600 women who were former and current Novartis employees had joined the class action suit.
In 2010, a jury of five women and four men ruled that Novartis should pay $250 Million in punitive damages to the women. The jury found that the company had consistently engaged in discrimination against its female employees. The court had also ordered the company to pay $3.3 Million in compensatory damages to 12 women who had testified in the case.
4. United States v. Novartis (Foreign Corrupt Practices and bribery) – $345 Million
In 2015, Norvatis Hella, which is a subsidiary of Novartis AG in Greece, was sued by the U.S government under the Foreign Corrupt Practises act. It was alleged that Novartis Hella and Alcon, a former Novartis subsidiary, were bribing employees of Greek hospitals and clinics to prescribe more of the Lucentis drug and bolster sales of the said drug, among others and that they falsified records to cover up their crimes. The lawsuit stated that between 2012 and 2015, Novartis bribed doctors in several state-owned hospitals in Greece and then falsified books and records to conceal the bribes.
In 2020, Novartis was ordered to pay $345 Million to the U.S government to settle the foreign corrupt practice charges. According to Reuters, a $234 Million criminal fine was paid to the U.S Department of Justice, and $113 Million settled related civil charges with the Securities and Exchange Commission.
3. United States ex rel. Kester v. Novartis Pharms. Corp. (False Claims and Kickback Allegations) – $390 Million
In 2013, a former Novartis employee, David Kester, filed a whistleblower complaint against the company under the False Claims Act. The law permits non-government employees to file actions on the government’s behalf. The lawsuit alleged that Novartis had defrauded Medicare and Medicaid programs by bribing doctors to prescribe six Novartis medications. The medications included Exjade, Myfortic, Gleevec, TOBI, Tasigna, and TOBI Podhaler, costing patients around $11,000 for refills every month. The lawsuit claimed that between 2007 and 2012, Novartis offered incentives to the Accredo Health Group and Bioscrip Inc. pharmacies to prescribe the drugs to boost sales.
As stated by the Corporate Crime Reporter, Novartis agreed to pay a settlement of $390 Million before the trial started. $370 million was paid to the government as a settlement for the violation of the false claims act, while $20 Million was settled as forfeiture from proceeds from the sales scheme. Out of the $370 Million, Novartis paid the U.S government $286 Million, while $83 Million went to various states.
2. United States v. Novartis Pharmaceuticals (Off-label Marketing for Trileptal) – $422 Million
In 2010, Novartis was sued by the United States for the illegal marketing and off-label promotion of Trileptal, which violated the Food, Drug, and Cosmetics Act. The FDA approved Trileptal as an anti-epileptic drug for treating partial seizures but not for psychiatric treatment, pain medication, or other uses. After the FDA has approved a drug, it cannot be marketed for any use other than that stipulated by the FDA. The lawsuit claimed that Novartis marketed and sold Trileptal for the treatment of Psychiatric disorders and neuropathic pain, which were not medically approved uses of the drug. The government also accused the company of bribing medical professionals to prescribe Trileptal and five other drugs, Zelnorm, Sandostatin, Exforge, Diovan, and Tekturna.
In September of the same year, according to The Newyork Times, Novartis agreed to pay a $422.5 Million settlement to resolve the criminal and civil liability that arose from the suit. As part of the settlement, the company paid $237.5 Million for civil allegations and the false claims act that it illegally marketed and sold Trileptal and five other drugs, a criminal fine and forfeiture of funds totaling $185 Million, and a $25 Million settlement for four whistleblowers who brought the case forward.
1. United States ex rel. Bilotta v. Novartis Pharm. Corp. (Civil Fraud Suit) – $678 Million
In 2013, The U.S government filed a civil fraud lawsuit against Novartis Pharmaceuticals, accusing it of violating Anti-kickback and the Federal False Claims laws. The government accused Novartis of violating these laws by bribing doctors with cash payments, lavish dinners, and recreational outings so that the doctors would prescribe the company’s cardiovascular and diabetes drugs to patients. In the lawsuit, the government alleged that Novartis did this through the many sham educational events and conferences it held between 2002 and 2011, using these events to pay exorbitant fees to speakers and buy expensive alcohol and food for doctors and attendees. They claimed that when the doctors prescribed Novartis drugs, the government was forced to pay millions of dollars in reimbursements for prescriptions through federal healthcare programs.
According to the United States Department of Justice, in 2020, Novartis was ordered to pay a $678 Million settlement to the United States government and other states. During the trial, the company admitted to the allegations and entered into a corporate integrity agreement which limits the company’s ability to hold future speaker forums. Novartis paid the U.S government $592 million as damages for the False claims act, $38 Million for violation of the Anti-kickback Statute, and $48 Million to various states.