Consumer Fraud

BioScrip to pay $15 million to resolve whistleblower allegations of drug fraud scheme

osha whistle BioScrip to pay $15 million to resolve whistleblower allegations of drug fraud schemeThe U.S. government and six states have reached a settlement agreement with BioScrip Inc., a provider of prescription drugs to Medicare patients. The $15-million settlement resolves allegations brought by a whistleblower under the False Claims Act that the company received illegal kickbacks in exchange for pushing the Novartis drug Exjade on patients who didn’t need the drug or had stopped taking it because of concerns about the drug’s side effects.

U.S. authorities alleged that BioScrip was part of a scheme of kickbacks and fraud orchestrated by Novartis Pharmaceuticals Corporation in an effort to boost sales of Exjade, a drug used to treat chronic iron overload resulting from blood transfusions.

According to the U.S., Novartis launched the scheme in 2007 when it became concerned that many patients were discontinuing their use of Exjade because they were worried about the drug’s serious, life-threatening side effects.

When Novartis gained FDA approval for Exjade, it created a closed distribution network that included BioScrip and two other pharmaceutical providers, which dispensed most of the Exjade prescriptions in the U.S. Novartis was able to easily monitor and manipulate Exjade prescriptions sold through this small, limited network.

The scheme also gave Novartis more control over Exjade prescriptions by rewarding the distributor company that sold the most units of the drug with rebates, discounts, and other illegal kickbacks. BioScrip often won these sales competitions and received valuable new patient referrals as a reward.

Federal and state investigations also found that Novartis designed an Exjade “scorecard” to measure how long patients took the drug and then used this information to reward the pharmacies that kept patients on the drug the longest by providing them with new Medicare patient referrals.

A former BioScrip manager stated under oath that the competitive kickback scheme caused BioScrip “to be focused exclusively on the number of orders and refill rates rather than on patient care.”

“As alleged, Novartis is caught having orchestrated yet another scheme whereby it used the lure of kickbacks to co-opt a healthcare providers’ independence and, in this case, turned pharmacy employees at BioScrip into salespeople for Exjade,” said Manhattan U.S. Attorney Preet Bharara. “By allegedly having BioScrip promote refills … Novartis caused patients to receive one-sided advice that did not discuss Exjade’s serious, potentially life-threatening, side effects,” he added. As a result, Novartis not only endangered peoples’ lives but “caused the public to pay tens of millions of dollars for kickback-tainted drugs.”

The U.S. filed additional civil health care fraud claims in Manhattan federal court against Novartis once the BioScrip settlement was reached.


U.S. Attorney’s Office for the Southern District of New York
U.S. Justice Department