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Pharmacy benefits unit to pay $45 million over Novartis kickback scheme


(Reuters) — A unit of pharmacy benefits manager Express Scripts Holding Co. will pay $45 million to resolve U.S. claims it participated in a kickback scheme with Novartis AG to boost sales of a drug that led to improper government reimbursements.

The settlement with specialty pharmacy Accredo Health Group Inc. was disclosed in court papers filed Thursday in federal court in Manhattan, as the U.S. Justice Department moved to further intervene in a whistleblower case against Novartis. The Justice Department claimed Novartis unlawfully offered patient referrals to Accredo from 2008 to 2012 in return for recommending patient refills of Exjade, which is intended to reduce excess iron in patients who receive blood transfusions. The government says the scheme violated the False Claims Act and the Anti-Kickback Statute.

The office of Manhattan U.S. Attorney Preet Bharara said Accredo made several admissions in the settlement that it hopes to use to expand the case against Novartis. Express Scripts said on Friday that a settlement "was the best possible solution".

Novartis said it continued to dispute the allegations and will continue to defend itself.

Representatives for Bharara's office did not respond to requests for comment.

The government announced its lawsuit against Novartis in 2013, accusing the drug company of providing discounts and rebates from 2005 to 2013 to induce at least 20 pharmacies to switch thousands of patients to Myfortic, an immunosuppressant. The Justice Department also said that, similar to the Accredo case, Novartis offered patient referrals and rebates to pharmacy BioScrip Inc. to recommend refills of Exjade from 2007 to 2012.

The government said Medicare, the program for the elderly and disabled, and Medicaid, the low-income insurance program, improperly paid tens of millions of dollars of improper reimbursements. Eleven U.S. states are co-plaintiffs.

BioScrip settled for $11.7 million in January 2014.

The government lawsuit stemmed from a whistleblower case by David Kester, a former Novartis respiratory account manager from Raleigh, North Carolina. He is also pursuing separate whistleblower claims against Novartis and other companies regarding other drugs.

Bharara's office is continuing a separate lawsuit against Novartis, claiming Medicare and Medicaid paid reimbursements based on kickback-tainted claims for drugs such as Lotrel, Valturna and Starlix.

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