The U.S. Justice Department announced today that Novartis AG, an international pharmaceutical company, has agreed to pay $72.5 million to settle a false claims lawsuit pending in federal court in San Francisco.
The so-called whistleblower lawsuit was originally filed in 2006 by three former employees of Emeryville-based Chiron Corp., which was acquired earlier that year by Novartis AG of Basel, Switzerland.
The case was later taken over by the U.S. government under a procedure provided by the U.S. False Claims Act.
The lawsuit alleged that Novartis and Chiron between 2000 and 2006 submitted false bills to government health care programs for unauthorized use, sometimes known as off-label use, of a cystic fibrosis drug.
The drug, an inhaled antibiotic, is known as TOBI, or tobramycin solution for inhalation.
The Justice Department said the federal government will receive $43.5 million of the settlement and 10 states including California will receive $29 million.
Jack Gillund, a spokesman for the U.S. attorney’s office in San Francisco, said he did not know how much California will receive.
The three original whistleblowers and their lawyers will receive $7.8 million, which will come out of the federal share.
The Justice Department did not give details about which government programs were allegedly defrauded, but provided a statement from a Defense Department investigator indicating that at least some of the alleged false claims were for military health care.
Richard Gwin, who heads the Defense Criminal Investigative Service’s western field office, said in the statement, “This particular fraud was directly related to the health care of our brave soldiers, sailors, airmen, marines and their families throughout the world.”
The settlement is with two Novartis subsidiaries, Novartis Vaccines & Diagnostics Inc. and Novartis Pharmaceuticals Corp.
The company issued a statement confirming the settlement but denying any wrongdoing.
Novartis said, “The settlement agreement does not include any finding of wrongdoing or any admission of liability by the companies.
“Although we have settled, we disagree with and expressly deny the allegations of the federal government and (the whistleblowers), and further deny any liability related to their contentions,” the statement said.