Novartis to Pay $19.9 Million to Settle False Claims Charge

The Swiss-based pharmaceutical giant Novartis will pay Texas $19.9 million to settle allegations that it violated the False Claims Act.

The lawsuit was originally filed by Donald Galmines in federal court in Pennsylvania. Galmines is a former Novartis marketing representative.

Galmines is being represented by Jennifer Verkamp and Rick Morgan of Morgan Verkamp of Cincinnati, Ohio.

Galmines’ responsibilities included the marketing of the topical cream Elidel, which had been approved by the Food and Drug Administration (FDA) for use on patients more than two years old who suffer from eczema and whose condition is not well-controlled by preferred, “first-line” treatments.

The lawsuit alleged that Novartis engaged in a practice known as “off-label marketing” by requiring its sales representatives to induce doctors to prescribe Elidel for uses not approved – and specifically rejected – by the FDA.

The primary off-label use at issue was for treatment of eczema in children younger than two years of age.

Elidel was not shown by Novartis to be safe and effective for such uses.

In 2005, the FDA required Novartis to put a “Black Box Warning” on Elidel packaging, warning physicians and consumers that certain cancers in infants were associated with the use of Elidel.

Galmines alleged that Novartis required its sales force to market Elidel for numerous conditions other than eczema, and that it paid physicians kickbacks to encourage them to do so.

The U.S. Department of Justice elected not to intervene in the Pennsylvania complaint filed by Galmines.

Galmines decided to proceed with that case on behalf of the United States and several states, including California, Massachusetts, Virginia, Illinois, and Michigan.

Galmines’s complaint initially included claims on behalf of the State of Texas.

Those claims were voluntarily dismissed, and subsequent events led to the Texas settlement.

That settlement provides for payment of attorney fees to the State of Texas and counsel for Galmines, as well as for a recovery of a share of the settlement to Galmines pursuant to the Texas Medicaid Fraud Prevention Act, which provides that a whistleblower such as Galmines is paid between 15 percent and 25 percent of such a settlement.

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