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Can pharmaceutical companies bounce back from Novartis scandal?

Pharmaceutical giant Novartis recently reached a settlement with the Department of Justice, Securities Exchange Commission and U.S. Attorney for the Southern District of New York regarding various claims of criminal wrongdoing. The allegations include claims the group violated the False Claims Act (FCA) and Anti-Kickback Statute (AKS). Essentially, the government claimed the group gave health care providers various incentives in exchange for using and prescribing their products.

One of the most well-known examples is the government's accusation the group would host a group of medical professionals, allegedly under the guise that one was providing an educational lecture. That physician would receive a speaker's fee for a lecture that the government claims was often not provided. Instead, the group would allegedly enjoy expensive dinners and entertainment events on Novartis' tab.

Ultimately, the group chose to settle the claims in an attempt to move on. The settlement includes agreements to implement "visible and vigorous policies and procedures" as well as periodic risk assessment and other requirements.

Although the example may seem extreme, it is easy for what a pharmaceutical company first sets up as a relatively simple marketing program to snowball into a situation that can result in similar allegations. Pharmaceutical companies are facing increased scrutiny as a result of this and similar cases. As a result, it is wise for leaders of pharmaceutical companies to review marketing programs and make changes as needed to better ensure compliance with the FCA and AKS. Those who find themselves facing such allegations or who are looking to review their processes, can seek outside counsel. An attorney experienced in how the FCA and AKS impact these practices can review your situation and provide guidance.

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