Novartis AG (NYSE:NVS) has reached a $678 million settlement in a civil fraud lawsuit that alleged the company bribed doctors at speaker events it organized.

What Happened

The agreement was made with the U.S. Attorney’s Office for the Southern District of New York, the New York State Attorney General, and the whistleblower Oswald Bilotta.  

The Government complaint had alleged that between 2002 and 2011, Novartis hosted “tens of thousands” of speaker programs but used these opportunities to bribe doctors.

The United States Department of Justice alleged that Novartis violated that federal False Claims Act and Anti-Kickback Statute by providing doctors with cash payments and other inducements, which led them to prescribe Novartis drugs reimbursed by federal healthcare programs.

U.S. Attorney Audrey Strauss commented on the settlement, “Giving these cash payments and other lavish goodies interferes with the duty of doctors to choose the best treatment for their patients and increases drug costs for everyone.”

Why It Matters

According to Novartis, it had fully provisioned the settlement in July 2019, and it will evolve its “peer-to-peer” medical education.

The company also finalized another $51.25 million agreement with the Department of Justice and the U.S. attorney's office for the District of Massachusetts on Thursday related to an investigation of the company’s support of “certain independent charitable copay foundations from 2010 to 2014.”

The Department of Justice said that Novartis had entered into a corporate integrity agreement, which will curtail the company’s ability to conduct speaker programs in the future and reduce the amount it can spend on such events.

Future Novartis speaker events must take place in the shape of a webinar. The integrity agreement will remain in place for five years.

Price Action

Novartis shares traded 0.51% higher at $88.30 in the after-hours session on Wednesday. The shares had closed the regular session 0.50% higher at $87.85.