Manhattan District Attorney Announces $60 Million Settlement With Accredo Over Illegal Kickbacks

In a somewhat alarming set of facts, self-proclaimed promoter of “specialty pharmacy solutions” Accredo has agreed to pay $60 million to resolve claims that it engaged in unlawful kickbacks with pharmaceutical company Novartis, Inc.

According to the details of the settlement, which were recently unsealed by U.S. District Judge Colleen McMahon, Accredo has agreed to the following terms:

• Payment of $45,060,598.87 to the United States
• Payment of $14,939,401.13 to several states
• Cooperation with the United States in the prosecution of Novartis Pharmaceuticals
• Admittance on the record of several facts alleged regarding its relationship with Novartis (discussed further below)

In a simultaneous filing, Manhattan officials agreed to dismiss the claims against Accredo while intervening on the claims involving Novartis’ role in the misconduct. Moving forward, the government plans to investigate and prosecute Novartis for engaging in dangerously unlawful conduct with regard to its drug known as Exjade, including unlawfully enticing patients to renew prescriptions and increased dosage without being necessarily advised by a healthcare professional.

Details of the scheme between Accredo and Novartis

The drug Exjade (deferasirox) is often prescribed to patients having received multiple blood transfusions and treats iron toxicity by acting as an iron chelator (binder). From approximately 2007 through 2012, Novartis offered lucrative referrals to specialty pharmacies like Accredo in exchange for the pharmacy’s agreement to promote and encourage patient refills of the drug. In so doing so, Accredo minimized (or failed to disclose) the severe or life-threatening side effects associated with Exjade, including abdominal pain, dizziness, nausea, voice changes, or renal and liver damage.

Unlike many False Claims Act settlements, wherein companies refuse to admit any instance of wrongdoing, Accredo admitted several facts, including the following:

• Accredo utilized a Novartis-supplied “scorecard” to keep track of its Exjade refills.
• In 2007, Novartis informed Accredo that it was unhappy with its Exjade performance and required Accredo to follow an “adherence improvement plan.”
• Accredo hired nursing staff to specifically follow-up with Exjade patients and increase patient refill rates.
• Beginning in 2008, Novartis announced it would be referring 60 percent of all Exjade patients to the top performing pharmacies, and the rest would be allocated at its discretion to other pharmacies.
• Accredo’s Exjade nurses were not instructed to discuss the “black box warning” associated with the drug, which indicates a serious risk of harm from known side effects.
• In 2010, Novartis informed Accredo it had met its Exjade requirements and was now a top-performing pharmacy. Consequently, it would be receiving 60 percent of all undesignated patients in the second, third, and fourth quarters in 2010, and for all four quarters in 2011.

Due to this scheme, the government concluded that its taxpayers had been defrauded out of tens of millions of dollars, prompting an immediate investigation and litigation.

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