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Novartis sued by U.S. states over alleged kickbacks to pharmacy firm

The logo of Swiss drugmaker Novartis is seen at its headquarters in Basel October 22, 2013. REUTERS/Arnd Wiegmann
The logo of Swiss drugmaker Novartis is seen at its headquarters in Basel October 22, 2013. REUTERS/Arnd Wiegmann

(Reuters) - U.S. states have sued Novartis over accusations the Swiss drugmaker paid kickbacks to a New York pharmacy company to promote its Exjade drug to treat excessive iron in the blood, the New York Attorney General said.

The complaint, unsealed on Wednesday, says Novartis paid New York-based specialty pharmacy company BioScrip to keep patients on Exjade at a time when the Swiss company feared patients were discontinuing its use because of harmful side effects.

The drug was approved in 2005 and the charges allege that the kickbacks started two years later.

Novartis disputed the claims and said it would defend itself against the litigation.

The complaint against Novartis was filed under the New York False Claims Act and other statutes in U.S. District Court for the Southern District of New York.

New York filed a joint complaint with eight other states in the case, which was initiated by a whistleblower, New York Attorney General Eric Schneiderman said in a news release.

BioScrip has agreed to pay $895,000 to resolve claims against it in the case, Schneiderman said. Of that, $489,000 will go to reimburse federal taxpayer dollars paid by New York's Medicaid program and $405,000 will go to repay state Medicaid funds. A portion of the total will also go to the whistleblower who made the initial allegations.

"This arrangement between Novartis and BioScrip was dangerous for patients and is against the law," Schneiderman said in a statement. "Our lawsuit against Novartis and our agreement with BioScrip send a clear message: Drug companies cannot pay pharmacies to promote drugs directly to patients."

Novartis said its interactions with BioScrip were part of its efforts to assure patients were properly managing a serious disease through the use of Exjade, which is prescribed for patients who suffer dangerous iron overload in the blood following transfusions.

"The company disputes the allegations made by the Attorney General for the State of New York related to Novartis Pharmaceutical Company's (NPC) interactions with specialty pharmacy BioScrip and intends to defend itself in this litigation," André Wyss, NPC President, said in an emailed statement.

NPC is the U.S. based unit of Swiss-based Novartis AG.

(Reporting by Bill Berkrot; editing by Andrew Hay)

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