Novo Settles U.S. Probe of Kickbacks, Disguised Salespeople

(Bloomberg) -- Novo Nordisk A/S has agreed to settle a U.S. probe of its marketing of diabetes drugs that allegedly included disguising salespeople as medical educators and paying kickbacks to persuade doctors to prescribe its medicines. The allegations were disclosed when a whistle-blower lawsuit was unsealed by a judge.

The U.S. Justice Department investigation, which began in 2011, focused on claims of illegal marketing of the Danish insulin supplier’s top-selling Victoza diabetes drug and other products, according to Novo’s 2016 annual report.

“We’ve reached an agreement in principle to settle certain claims related to this investigation,” Ken Inchausti, a U.S.-based spokesman for Novo, said in an emailed statement Friday. “The process is not finalized, and as such we can’t provide further comment on this matter at this time.”

Inchausti said the whistle-blower suit was unsealed Thursday as part of the settlement. Nicole Navas, a DOJ spokeswoman, didn’t immediately return a call and email seeking comment on the Novo accord.

The suit was filed by two whistle-blowers who claimed the company violated U.S. law by wrongfully inducing doctors to write prescriptions for Victoza that were covered by federal health-insurance programs.

The lawsuit targeted Bagsvaerd, Denmark-based Novo’s key products. Diabetes treatments accounted for almost 80 percent of the company’s 111.78 billion kroner ($16.3 billion) of revenue in 2016. The drug sales have increased more than 75 percent in the past five years, rising to 88.95 billion kroner in 2016 from 50.43 billion in 2011.

Since 2006, Novo officials have “engaged in an unlawful marketing and kickback scheme with respect to the drugs NovoLog, Levemir and Victoza that was intended to induce physicians to improperly prescribe these medications,” the whistle-blowers said in the lawsuit.

The company has faced claims before that it improperly marketed drugs. In 2009, it agreed to pay $18 million to settle U.S. criminal and regulatory probes of kickbacks to Saddam Hussein’s Iraqi regime.

Disguised Educators

A former Novo sales manager and a nurse who was a contractor said the pharmaceutical maker sent salespeople disguised as diabetes educators into doctors’ offices to illegally promote the firm’s medicines, including Victoza.

Victoza, an injection that stimulates the natural production of insulin, is the company’s biggest-selling drug and one of its fastest-growing products. It produced 20 billion kroner in 2016 sales and is expected to reap 22.6 billion kroner this year, according to data compiled by Bloomberg.

The Novo-funded training sessions with doctors and patients, along with giveaways such as blood-testing log books, amounted to illegal kickbacks to physicians in exchange for prescribing the drug, according to the suit.

The diabetes educators’ performance review and compensation were tied to the amount of sales their efforts produced, the whistle-blowers said.

The diabetes-drug prescriptions tied to Novo’s campaign violated U.S. false-claims laws, which prohibit drugmakers from getting insurance reimbursements from federal programs produced by illegal marketing tactics, the whistle-blowers said.

The case is U.S. v. Novo Nordisk A/S, NO. 17-CV-791, U.S. District Court, District of Columbia (Washington).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net, Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net.

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider, Andrew Martin