Novartis Deferred Prosecution Agreement
Novartis Deferred Prosecution Agreement: A Closer Look at One of The Biggest Healthcare Settlements in History
In 2010, Novartis, one of the biggest global healthcare companies, found itself in serious trouble with the United States government. The company was accused of paying bribes to healthcare providers and other entities to increase sales of its drugs, and for engaging in a variety of other illegal activities. As a result, Novartis was forced to enter into a deferred prosecution agreement with the U.S. Department of Justice (DOJ) and pay a fine of $422.5 million.
Now, ten years later, it is still one of the biggest healthcare settlements in history, and it has set the tone for other healthcare companies that might be tempted to engage in illegal practices.
What is a Deferred Prosecution Agreement?
A deferred prosecution agreement (DPA) is a legal agreement between a company and the government, in which the government agrees to defer prosecution of the company for a period of time, usually two to three years, as long as the company meets certain conditions. These conditions can include paying a fine, cooperating with the government’s investigation, and implementing new compliance measures.
The purpose of a DPA is to prevent a company from being convicted of a crime, which would have serious consequences, such as being excluded from government contracts, losing its license to operate, or facing other forms of enforcement action.
Why Did Novartis Enter Into a DPA?
In the case of Novartis, the company was accused of engaging in a variety of illegal activities, including paying bribes to healthcare providers to prescribe its drugs, providing illegal kickbacks to pharmacy benefit managers, and engaging in off-label marketing of its drugs. The DOJ also accused Novartis of violating the False Claims Act by submitting false claims for Medicare and Medicaid reimbursement.
In order to avoid facing criminal charges, which could have resulted in significant fines, exclusion from government programs, and reputational damage, Novartis entered into a DPA.
What Were the Conditions of Novartis’s DPA?
Under the terms of the DPA, Novartis was required to pay a fine of $422.5 million, which was one of the largest healthcare settlements in history at the time. The company was also required to implement new compliance measures, such as creating a new system for tracking and reporting payments to healthcare providers, and providing regular reports to the government on its compliance efforts.
In addition, Novartis agreed to cooperate fully with the government’s ongoing investigation and to make its executives available for interviews. The company also agreed to appoint an independent monitor to oversee its compliance efforts and report to the government.
What Was the Impact of Novartis’s DPA?
Novartis’s DPA had a significant impact on the company and the healthcare industry as a whole. The company was forced to make significant changes to its compliance program, which led to increased scrutiny of its business practices. As a result, other healthcare companies that might be tempted to engage in illegal activities now know that the government will not hesitate to pursue them.
In addition, the Novartis settlement led to increased awareness of the risks of healthcare fraud and abuse, which has led to increased enforcement action by the government. This has included increased scrutiny of healthcare providers, such as physicians and hospitals, as well as pharmacy benefit managers and other entities.
Conclusion
The Novartis deferred prosecution agreement was a significant event in the healthcare industry, and it had a lasting impact on the company and the industry as a whole. The DPA set the tone for other healthcare companies that might be tempted to engage in illegal activities, and it led to increased enforcement action by the government. While Novartis paid a significant price for its illegal activities, the company is now in a better position to prevent similar conduct in the future.
