Litigation

Another Specialty Pharmacy Settles Exjade False Claims Allegations For $45 Million

NEW YORK —(Mealey’s) Specialty pharmacy Accredo Health Group Inc. on April 30 agreed to pay $45 million to settle a whistle-blower’s allegations that its efforts to push prescriptions for the iron chelation drug Exjade resulted in false claims being submitted to federal health care programs (United States of America, ex rel. David Kester v. Novartis Pharmaceuticals Corp., et al., No. 11-8196, S.D. N.Y.). 

(Stipulation available.  Document #28-150507-025P.

Under a stipulation and order of settlement and dismissal filed in the U.S. District Court for the Southern District of New York, Accredo agreed to pay the federal government $40,060,598.87 plus annual compounded interest of 3.25 percent accruing from April 10, 2015.  It also agreed to cooperate “fully and truthfully” with a federal investigation of “individuals and entities” not released in the litigation. 

The settlement gives relator David Kester the right to attempt recovery of reasonable expenses and attorney fees and costs from Accredo.  The stipulation does not list a relator’s share of the recovery for Kester. 

Novartis Is Main Defendant

The settlement is a part of a False Claims Act/Anti-Kickback Statute lawsuit against Novartis Pharmaceuticals Corp., which makes Exjade.  The federal government had declined to intervene in Kester’s claims against Accredo but moved to do so April 29. 

In its motion to intervene, the government says that since it declined to intervene with regard to Accredo, it learned from Kester’s discovery that “Novartis also unlawfully offered inducements to Accredo in return for recommending Exjade refills to patients.” 

(Intervention motion available.  Document #28-150507-026M.

The government in 2013 intervened against Novartis, and the company remains a defendant.  A Nov. 2 trial is scheduled. 

Inducements, ‘Scorecards’

According to the stipulation, from 2005 to 2012, Accredo and Novartis were in a contract for the distribution of Exjade.  Accredo was one of three specialty pharmacies permitted to distribute Exjade as part of Novartis’ EPASS (Exjade Patient Assistance and Support Services) program. 

The stipulation says that if Exjade prescriptions were not directed to a particular pharmacy based on insurance requirements, Novartis would assign the prescriptions to the three specialty pharmacies.  In addition to charging for the drug, Accredo also got dispensing fees and rebates from Novartis. 

Novartis issued monthly “Exjade Scorecards” that measured pharmacies’ “adherence” scores, the stipulation says.  It says that in late 2007 or early 2008, Novartis told Accredo that it was dissatisfied with the pharmacy’s “adherence” and that it needed to improve. 

In response, Accredo hired a nurse who would make phone calls to Exjade patients, the stipulation says.  The nurse was to tell patients about the importance of Exjade therapy and about common adverse reactions from the drug but not more serious reactions such as renal or hepatic impairment. 

Black Box Warnings Not Mentioned

The stipulation says that when, in 2010, the Food and Drug Administration required a black box warning on the Exjade label to highlight renal and hepatic impairment and gastrointestinal hemorrhage, Accredo failed to have its nurse pass that information along to patients. 

In 2012, Novartis stopped allocating Exjade referrals based on the highest scorecard, Accredo stopped assigning nurses to call Exjade patients and the contract expired, the stipulation says. 

A spokesman for Express Scripts Holding Co., the parent of Accredo, told Mealey Publications on April 30, “The settlement relates to a legacy Accredo matter.  Given the opportunity to settle we determined it to be the best possible solution.” 

Myfortic Drug Also In Play

The allegations against Novartis also include its drug Myfortic, which is prescribed to help prevent organ rejection after transplant surgery. 

In Aug. 21, Judge Colleen McMahon allowed most of the government’s false claims and kickback claims to proceed against Novartis for Exjade and Myfortic. 

Specialty pharmacy BioScrip Inc. was also a defendant in the case.  In 2014, it reached a $11.68 million settlement. 

Counsel

The federal government is represented by U.S. Attorney Preet Bharara and Assistant U.S. Attorneys Li Yu, Rebecca C. Martin, David J. Kennedy, Jeffrey K. Powell and Peter M. Arnoff of the U.S. Attorney’s Office in New York. 

Kester is represented by Shelley Slade of Vogel, Slade & Goldstein in Washington, D.C., and Arun Subramanian of Susman Godfrey in New York. 

Accredo is represented by Daniel Meron and Allen Gardner of Latham & Watkins in Washington. 

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