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Whistle-blower case that started in Tampa results in $422.5 million settlement

A whistle-blower case that began at the federal courthouse in Tampa ended Thursday with a huge nationwide settlement — and a $20 million reward for the two men who started it.

Novartis Pharmaceuticals Corp. agreed to plead guilty and pay $422.5 million in fines and penalties for marketing the anti-epilepsy drug Trileptal for unapproved "off-label" uses, federal prosecutors said.

Nearly half of that, $201 million, will cover Novartis' liability arising from a 2004 whistle-blower lawsuit filed in Tampa. It was the first of four false claims suits that led prosecutors in Tampa and Philadelphia to intervene and prosecute the cases on behalf of taxpayers.

To encourage individuals to identify companies that defraud programs such as Medicaid and Medicare, federal law permits whistle-blowers to share in any funds the government recovers.

As a result, $20.2 million of a total of $25.6 million in reward money will go to two former Novartis salesmen, Jim Austin and John Montgomery, who brought the original lawsuit in Tampa. Neither responded to an interview request made through their attorney Thursday.

Austin lived in North Carolina and Montgomery lived in Virginia when they filed their suit. Their attorney, Kenneth Nolan, specialized in health care fraud at a law firm in Fort Lauderdale.

But they filed the lawsuit in Tampa, Nolan said, because the U.S. Attorney's Office here has a "good reputation" for pursuing cases of health care fraud. Each man had worked for Novartis for 20 years or more, and they sensed that the case was a big one.

"There was a lot of inappropriate off-label promotion going on," Nolan said. "We knew that the percentage of off-label sales was robust and the damages would be high."

Locally, Assistant U.S. Attorney Randy Harwell handled the case. In a statement, U.S. Attorney A. Brian Albritton called the settlement a "major victory" in a long-running fight against health care fraud.

The Food and Drug Administration approved Trileptal to treat epilepsy, but starting in 2000 or 2001, Novartis illegally marketed it as a treatment for bipolar disorder and nerve pain, prosecutors said. The company targeted psychiatrists and pain specialists, and it sent sales representatives to doctors who normally would not have prescribed Trileptal.

Doctors are allowed to use their medical experience and judgment to prescribe medications for off-label uses, but pharmaceutical companies cannot market drugs for uses not approved by the FDA.

The company also gave doctors kickbacks to prescribe Trileptal and paid doctors speakers' fees or offered gifts of meals, entertainment and travel to prescribe five other drugs, prosecutors said.

Novartis reaped hundreds of millions of dollars in profits from the illegal marketing of Trileptal, prosecutors said. Officials did not allege, however, that any patients were harmed by the practice.

In a statement, Novartis said it was "pleased to have this matter behind us" and promised to "continue to work with the government and other organizations to improve health care for all Americans."

"We are committed to high standards of ethical business conduct and regulatory compliance in the sale and marketing of our products," the company said.

Based in East Hanover, N.J., Novartis Pharmaceuticals is a subsidiary of Swiss company Novartis AG, whose revenues are the third highest in the world among drug makers.

Information from the Associated Press was used in this report. Richard Danielson can be reached at Danielson@sptimes.com or (813) 226-3403.

Whistle-blower case that started in Tampa results in $422.5 million settlement 09/30/10 [Last modified: Thursday, September 30, 2010 11:13pm]

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