I have written extensively about the Novartis International AG (Novartis) Foreign Corrupt Practices Act (FCPA) settlement, which was announced in late June. However, the enforcement action paled next to the Stipulation and Order of Settlement and Dismissal (Stipulation), dated July 1, 2020, entered against Novartis Pharmaceuticals Corporation for its bribery and corruption in the US. The first settlement pertains to the company’s alleged illegal use of three foundations as conduits to pay the copayments of Medicare patients taking Novartis’s drugs Gilenya and Afinitor. The second settlement resolves claims arising from the company’s alleged payments of kickbacks to doctors. The Settlement Agreement (Settlement Agreement) was entered into in the US District Court for the Southern District of New York.
These cases had much for every compliance practitioner to consider, including the specific illegal conduct of Novartis, the deficiencies in their compliance program, compliance function and Chief Compliance Officer (CCO); the role of the whistleblower, corrupt culture and lessons learned. Over this series I have been considering the Novartis US settlements and Corporate Integrity Agreement (CIA). I intended to wrap up this series today but I wanted to tell the tale of the whistleblower who caused all this to happen, Oswald ‘Ozzie’ Bilotta. Bilotta was awarded $109 million for his work in bringing a successful False Claims Act case against Novartis US.
The best article I have seen about his story is by Gretchen Morgenson on NBC.com. Bilotta felt as if he had gotten his dream job when he got the job at Novartis. He said, “The positions are very competitive — they have thousands of applicants per job. You felt almost honored to have gotten the position.” However, he quickly found out that the company was engaged in shady conduct to get doctors to prescribe Novartis drugs.
Bilotta said to Morgenson that almost right away “some things seemed off”. Even though Novartis employees knew this type of corruption was illegal as “Novartis’ ethics policy stated that it was a criminal offense to offer payments or inducements to prescribe its drugs”. Bilotta said that “keeping high-prescribing doctors happy was an intense focus at Novartis. At meetings with higher-ups, sales representatives would get hundreds of dollars in American Express gift checks to present to doctors.”
Moreover, the corrupt culture at Novartis US only got worse during the time Bilotta was with the company. Morgenson noted, “as the years progressed, talk grew among pharmaceutical sales representatives about other drug companies’ buying big-ticket items for doctors — covering the cost of a swimming pool was one rumor Bilotta recalled. Some physicians started asking for more — a television for the waiting room, a donation to a child’s graduation. A top prescriber demanded that Novartis hire his son, which it did. The son didn’t last long on the job, Bilotta said.”
All of this will sound very familiar to any compliance professional who deals with the FCPA. Indeed, one only need to look at the Novartis FCPA enforcement action to see that employees outside the US were told that corruption was illegal yet the company turned a very blind eye to it or worse actively led it, both inside and outside of the US.
As the decade proceeded, Novartis US grew more brazen about corruption that it became more than routine, it became mundane. Bilotta said, “I saw things evolve. We went from a strictly product focus to one that is more about incentivizing.” This is the functional definition of paying money to get a result. It was so brazen (and mundane at the same time) that “Every quarter, Novartis would require its sales representatives to spend a budgeted amount, say, $5,000 apiece, on doctor speaker programs, Bilotta said. The funds were allocated immediately.” If a sales representative did not pay out all the allocated funds, ““there’d be hell to pay”. I had situations where my sales were good and for some reason, I didn’t spend all my money and they would threaten my job. They had a specific return on investment they attached to the money they spent.” Nothing like incentives to pay bribes.
Then the company began “its doctor speaker programs, at which the company paid physicians to educate other practitioners about a drug’s merits. But some of the drugs Bilotta sold had been around for years and were well-known, making it clear to him that the events were simply a payment system, he said. At the vast majority of the programs, small talk dominated and the drugs weren’t mentioned. “They wanted to have the veneer of conveying medical knowledge,” he said. “But how much education on these old drugs do you need? I’d be stunned if 10 percent of the programs were legitimate.””
The end came for Bilotta in 2010 when he went to a supervisor about the corrupt conduct. Nothing happened so Bilotta “decided to contact whistleblower lawyers. By early 2011, he’d been debriefed by law enforcement, and before he filed suit, he began wearing a wire to record conversations with six doctors in his territory. Two took $500 each in cash, and the others confirmed receiving prior inducements or being willing to do so in the future.” It was at this point, it all became very real for Bilotta. He eventually had to move from his home in New York after his name was revealed and he and his family were targeted with death threats.
Now that he has gone through the process, Bilotta says “he wants to work to change health care practices and laws that harm patients and taxpayers. Allowing the reimportation of drugs and letting the government negotiate drug prices would save taxpayers tens of billions of dollars, he said, and he plans to work on promoting those changes. “My intention is to keep this good momentum up and benefit the taxpayers.””
About the ordeal he and his family went through, “he said the process isn’t for everyone. “It is not an easy road — it’s very psychologically taxing,” Bilotta said. “You have to be very sincere in what you’re doing and be prepared to be opened up to a tremendous amount of scrutiny. Go with your convictions, but if you’re doing it for financial gain, it’s a mistake.””
The US government and all its citizens owe a heartfelt Thank You to Ozzie Bilotta.
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