Novartis Pays More than $35 Million to Settle False Claims Case

Novartis Pharmaceuticals Corporation has paid more than $35 million to resolve federal and state False Claims Act allegations resulting from the off-label marketing for Elidel.


Elidel is a cream approved by the Food and Drug Administration to treat eczema in patients older than two when conventional therapy is ineffective “or not advisable,” and only for short-term use.

The settlement resolves a qui tam whistleblower case brought by former Novartis sales representative Donald Galmines.

The case was filed in a Philadelphia federal court in July 2006.

Donald Galmines

Donald Galmines

“Off-label marketing” occurs when pharmaceutical companies work to convince physicians or other health care providers to prescribe medications for purposes, or for patient populations, unapproved by the FDA.

Animal studies suggested that Elidel could cause skin cancer and non-Hodgkin’s lymphoma, and the FDA specifically refused to approve it for use on infants younger than 24 months.

Most cases of eczema manifest during infancy, and are treated effectively with topical corticosteroids.

Galmines alleged that he was instructed to tell doctors that Elidel was safe and effective for use on infants, and capitalize on what Novartis referred to as “steroid phobia” to boost the prescribing of Elidel.

Galmines also alleged that Novartis violated federal and state kickback laws by paying physicians to attend lavish dinners and conferences where off-label uses of Elidel were advocated.

“I thought that being a sales representative for Novartis was the best job I could ever have,” said Galmines, 44, of Frankfort, Illinois. “We were instructed that Elidel was so safe it could be put on up to 80% of a baby’s body. And we were never told that it might cause cancer.”

As to the kickbacks, Galmines was trained to invite doctors and their families or staffs to dinners in expensive restaurants where Elidel might not even be discussed, in order to buy their loyalty.

“Doctors told me that as long as the gifts kept coming, they’d prescribe to anyone I told them to,” Galmines said.

ovartis’s marketing activities were so successful that in 2004, the FDA convened a “Pediatric Advisory Committee” to study the cancer risk and quell infant prescribing.

In March 2005, FDA announced a “Black Box Warning” for Elidel.

The Black Box is the FDA’s strongest advice to physicians and consumers regarding unapproved uses.

In 2009, the federal and state governments decided not to intervene in the case, and Galmines pursued the litigation on their behalf.

Galmines and his counsel litigated the case for several years.

They reviewed of millions of sales-representative “call notes,” millions of pages of corporate documents, and testimony from almost two dozen witnesses.

“The government only intervenes in about one in five whistleblower cases,” said Frederick Morgan, one of Galmines’s attorneys. “But the False Claims Act allows whistleblowers to go forward on behalf of the taxpayers if the government chooses not to take over.

“We had no doubt that Mr. Galmines was right, and we viewed the marketing of this drug for use in infants as a serious matter which caused real harm to Medicaid beneficiaries and programs” Morgan said.

The False Claims Act requires payment to successful whistleblowers of from 15% to 30% of the total recovery.

The United States and states have paid Galmines 29% of the amounts they received from Novartis.

Galmines also brought a separate case based on the off-label marketing of Elidel to treat infants in Texas, which is one of 30 states with their own qui tam fraud laws.

That case was settled in 2012 for $19 million in damages and fees, bringing the total Galmines has recovered for state and federal taxpayers to more than $54 million.

Galmines was represented by Frederick Morgan, Jennifer Verkamp, and Maxwell Smith of Morgan Verkamp in Cincinnati, and Marc Weingarten of Philadelphia.

Novartis was represented by Michael Rogoff of Kaye Scholer in New York.

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