Scandal and corruption have followed Novartis non-stop along the entire arc of its 50-year history. Just a year after its corporate predecessor Ciba-Geigy was founded in 1970, the company’s dysentery drug clioquinol was pulled after it was linked to brain damage, blindness and other serious health problems in Japan.
Since then, Novartis’ rap sheet has been filled with episodes of many other harmful drugs, antitrust charges, bid-rigging, price-fixing, Medicare misconduct, toxic pollution, illegal advertising, pay-to-prescribe schemes, kickbacks and bribery. Notwithstanding Novartis’ many legitimate contributions to alleviating illness and disease, the company’s long history of misconduct is shocking and saddening. These misdeeds were not committed by a socially detached bank or hedge fund, but by a company committed to preserving and improving the health of people.
In recognition of exposing Novartis’ latest bribery and corruption scandal, whistleblowers in Greece have received a prominent award from European lawmakers. Last month these citizens received the “Journalists, Whistleblowers and Defenders of the Right to Information Prize.” Dedicated to the memory and legacy of murdered Maltese journalist Daphne Caruana Galizia, the award is presented annually by the European United Left/Nordic Green Left faction of the European Parliament.
Among the confidential and anonymous whistleblowers are those represented by Stephen M. Kohn of the US-based whistleblower law firm Kohn, Kohn & Colapinto.
These bombshell disclosures led directly to $347 million in fines imposed on Novartis in June by the US Securities and Exchange Commission and Department of Justice. The penalties, which include disgorgement of $92 million in ill-gotten revenue, also cover offenses committed by Novartis and affiliates in South Korea and Vietnam.
According to the SEC and DOJ, Novartis and its former subsidiary Alcon gave improper payments and other benefits to healthcare providers in exchange for using and prescribing the companies’ medical products. Those receiving the corrupt payments included employees of publicly owned hospitals and clinics. Novartis brand managers and sales managers in Greece instructed subordinate staffers on how to distribute these “investments,” which were improperly recorded in the company’s books as advertising, marketing and sales expenses.
Also, in Greece, Novartis paid $5,000 to health care providers they considered to be “key opinion leaders” to attend events, according to the SEC and DOJ. In exchange they agreed to prescribe Novartis’ macular degeneration drug Lucentis. Novartis recorded the arrangements as a return on investment. Novartis monitored the providers’ performance and reduced or stopped the illicit payments to those who did not meet their quotas.
One week after these fines were announced, the US Department of Justice fined Novartis $642 million for Medicare-related misconduct and paying kickbacks to doctors and other medical professionals to promote its drugs. The scheme was exposed by former Novartis sales representative Oswald Bilotta.
It remains to be seen whether nearly $1 billion in penalties levied within the span of seven days – along with negative publicity and a drop in stock price – will persuade Novartis to change its ways. What is certain is that company insiders will continue to become aware of any crimes being committed by Novartis, and that there are willing eyes and ears in the media, whistleblower law firms, and law enforcement agencies that are eager to receive and act on the evidence.
