(Bloomberg) -- A former Novartis AG sales representative will get a $109.4 million whistle-blower award, one of the largest such payouts ever, after the Swiss pharmaceutical giant agreed to resolve a lawsuit accusing it of paying kickbacks to thousands of doctors who prescribed its drugs.
Novartis agreed earlier this month to pay $678 million to end the suit, which claimed the drugmaker defrauded government programs like Medicare through its bribery of doctors. Sales representative Oswald Bilotta filed the suit in 2011 under the False Claims Act, which allows whistle-blowers to sue on behalf of the U.S. government and collect a percentage of any settlement or award.
Bilotta’s share is one of the largest ever in a whistle-blower case, in line with the $104 million former UBS AG banker Bradley Birkenfeld received in 2012 for helping the government crack down on the Swiss bank over tax-avoidance schemes offered to U.S. clients. By comparison, the Justice Department paid $265 million to whistle-blowers in all False Claims Act cases during the fiscal year 2019.
The size of the award shows the importance of Bilotta’s role in the case, said John Kostyack, executive director of the National Whistleblower Center, a Washington-based nonprofit. “It’s money the government never would have seen without the whistle-blower,” he said.
The Justice Department joined Bilotta’s suit in 2013, after the sales rep had already begun wearing a wire to record doctors taking bribes. In a court filing Wednesday, the government said it agreed to pay Bilotta 18.5% of the settlement, minus a $38.4 million forfeiture and separate pacts with states totaling $48.2 million.
The case was set to go to trial last year but was delayed while the parties engaged in settlement discussions. Novartis was facing allegations that it plied doctors with exorbitant fees to speak at marketing events, fishing trips, dinners at high-end eateries, and even outings at Hooters restaurants in exchange for prescribing Medicare-reimbursible drugs like hypertension treatments Lotrel and Valturna and diabetes medication Starlix.
As part of the accord, Novartis entered into a so-called “corporate integrity agreement” that changed how the company markets its drugs to doctors. It also resolved claims by the New York Attorney General’s Office over the kickbacks.
“We are pleased that the court has approved the award for Mr. Bilotta, which we believe is well deserved,” James E. Miller, an attorney for the whistle-blower, said in an email. He declined to say how much his firm will receive.
Kostyack said whistle-blowers often take “very brave steps” to expose wrongdoing and awards provide an incentive to someone who may risk their livelihood.
“We think it’s important to spread the word and help other whistle-blowers understand that if they’re sitting on information about a potential crime, there’s a way to report that confidentially and get a share of any fines or penalties,” he said.
Novartis shares rose less than 1% to 83.26 Swiss francs in Zurich trading Thursday.
The case is U.S. v Novartis Pharmaceuticals Corp., 11-cv-00071, U.S. District Court, Southern District of New York.
(Updates with comments from whistle-blower group and Bilotta’s lawyer)
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