|Footnotes for this article are available at the end of this page.
On July 1, 2020, the United States Department of Justice (DOJ) announced two settlements with Novartis Pharmaceuticals Corporation (“Novartis”), resolving allegations that the company had paid illegal kickbacks to physicians in the form of honoraria for speaker programs and other events,1 and that it had used charitable foundations as vehicles to provide copayments to Medicare patients prescribed Novartis drugs.2
Corporate Integrity Agreement
As part of the overall settlement, Novartis also entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).3 This CIA supersedes and replaces the CIA that Novartis entered into, effective September 29, 2010, which was later extended by a five-year term due to a 2015 Novartis settlement involving arrangements with specialty pharmacies.
In addition to the standard requirements typically seen in a CIA, the CIA also includes certain provisions specific to Novartis based on the alleged illegal conduct, including:
- the development of written policies and procedures regarding arrangements involving healthcare professionals who serve as presenters on behalf of Novartis, including at third-party scientific or medical conferences, or who participate in speaker training programs (referred to as “Speaker Programs”)
- the policies and procedures regarding Speaker Programs must specify that the events may not take place in restaurant venues and that alcohol may not be served or be available for purchase at such events;
- for “External Speakers” (e., non-Novartis employees engaged by Novartis to present at a Speaker Program), Novartis may provide remuneration only under the following circumstances:
- the program must be conducted in a virtual format (e., the speakers must be remote and not in the same location as any audience member);
- External Speaker Programs may occur only within 18 months of the FDA approval of a new government reimbursed product or new indication;
- Novartis may provide no more than a maximum of $100,000 in total remuneration (direct or indirect) for all External Speakers; and4
- each External Speaker shall receive no more than a maximum of $10,000 in total remuneration.
Speaker Programs may include real-time discussion between the External Speaker and audience members, and Novartis may record External Speaker Programs and make such recordings available during and following the 18-month period.
With respect to charitable copayments for Medicare patients, the CIA requires that Novartis include written policies and procedures to ensure that operation of, or participation in, any patient assistance program complies with all guidance issued by HHS-OIG regarding such programs. The CIA specifically calls out OIG’s Special Advisory Bulletin on Pharmaceutical Manufacturer Copayment Coupons (Sept. 2014) as providing guidance for Novartis’ policies and procedures.
Reflecting Novartis’s 2015 settlement, the CIA further requires that Novartis include policies and procedures to ensure that its arrangements with specialty pharmacies “are used for legitimate and lawful purposes in accordance with the federal anti-kickback statute (codified at 42 U.S.C. § 1320a-7b(b)) and other applicable Federal health care program and FDA requirements.” These policies and procedures must include:
- a requirement that all arrangements be subject to written review and approval;
- for fee-for-service arrangements, the policies and procedures must include requirements about the business need for the arrangements, the services provided under the arrangements, and the amount of compensation provided under the arrangements (including that the amount constitutes fair market value for the services rendered);
- services must be provided in a way that would not reasonably be expected to undermine or interfere with the clinical judgment of the patients’ prescribing health care professional;
- Novartis must not direct or encourage a specialty pharmacy to cause or encourage health care professionals to prescribe, or patients to ask their health care professionals to prescribe, a government reimbursed product over another medically-appropriate product; and
- the terms of the fee-for-service arrangement must prohibit the specialty pharmacy from offering a financial inducement to a health care professional to prescribe or switch patients to the Novartis product.
The CIA includes a number of monitoring and auditing requirements to ensure compliance with its obligations, including a requirement that Novartis executives and board members certify compliance with the CIA.
- With many speaker programs and events turning to virtual platforms due to COVID-19, this settlement and CIA serve as reminders that HHS-OIG and the DOJ are still monitoring and auditing for unlawful conduct related to speaker programs and events.
- The CIA includes a number of requirements that are specific to Novartis’s alleged unlawful conduct and can serve as useful guidelines to companies designing speaker programs and other events. As an example, drafting and implementing policies with maximum remuneration limits and timeframes for such programs may help reduce regulatory risks.
For more information, please contact Sara M. Lord.
 The announcement is available on the Department of Justice website at the following: https://www.justice.gov/opa/pr/novartis-pays-over-642-million-settle-allegations-improper-payments-patients-and-physicians (last accessed July 12, 2020).
 U.S. v. Novartis Pharm. Corp., No. 11 Civ. 0071 (PGG), (S.D.N.Y. June 29, 2020), available at the following https://www.justice.gov/usao-sdny/press-release/file/1291316/download.
 The CIA is available at the following: https://oig.hhs.gov/fraud/cia/agreements/Novartis_Corporation_06302020.pdf.
 The monetary limits include remuneration for speaking and for speaker training, but do not include any direct payment by Novartis for travel and travel-related expenses (e.g., hotels).