Novartis and Cohen: Two of a Kind
“Yesterday was not a good day for
Novartis.”
That’s what the chief executive of the pharmaceutical giant told his staff in the wake of embarrassing reports that it was among a handful of large corporations that made questionable payments to President Trump’s personal fixer Michael Cohen.
Novartis, which initially struggled to come up with a plausible explanation for its $1.2 million contract with Cohen, ultimately admitted it was a “mistake.”
That’s what the chief executive of the pharmaceutical giant told his staff in the wake of embarrassing reports that it was among a handful of large corporations that made questionable payments to President Trump’s personal fixer Michael Cohen.
Novartis, which initially struggled to come up with a plausible explanation for its $1.2 million contract with Cohen, ultimately admitted it was a “mistake.”
If so, it was not quite a honest
mistake. Novartis, like the rest of Big Pharma, was unnerved by the seeming
populism of Trump on the issue of drug prices. Yet it also apparently realized
this was an administration that was susceptible to outside influences,
especially if they came via someone like Cohen, who in 2017 seemed to be a much
more significant player than he turned out to be.
It should come as no surprise that
Novartis would resort to dubious measures to promote its interests, which
include getting federal blessing for its leukemia drug Kymriah, which costs
nearly $400,000 for a course of treatment.
The Swiss company has a long
history of improper behavior. For example, in 2010 it had
to pay $422 million to resolve criminal
and civil liability arising from charges that it engaged in illegal marketing
of its epilepsy drug Trileptal, including the payment of kickbacks to doctors
to get them to prescribe the medication for off-label purposes.
In 2015 Novartis agreed to pay $390 million to settle a case brought by the U.S. Attorney in Manhattan accusing it of making illegal kickbacks to get specialty pharmacies to recommend two of its drugs, Exjade and Myfortic.
In 2015 Novartis agreed to pay $390 million to settle a case brought by the U.S. Attorney in Manhattan accusing it of making illegal kickbacks to get specialty pharmacies to recommend two of its drugs, Exjade and Myfortic.
Novartis does not limit its illicit
marketing to the United States. In 2016 the Securities and Exchange
Commission announced that the company would pay
$25 million to settle charges that it violated the Foreign Corrupt Practices
Act when its China-based subsidiaries engaged in pay-to-prescribe schemes to
increase sales.
While Novartis seems willing to make
questionable payments to sell its products or gain regulatory favor, it has
been less interested in paying some of its employees what they should have
received in compensation. The company will be featured in a report on wage
theft my colleagues and I will publish next month.
That’s because of a collective
action lawsuit brought on behalf of the company’s sales representatives, who
alleged that they were improperly classified as exempt from overtime pay. In 2012
Novartis paid $99 million to settle the suit.
In 2005 a group of women who had
worked as sales reps for Novartis in the United States filed a lawsuit saying
they were discriminated against in pay and promotions, especially after
becoming pregnant.
In 2010 a federal jury ruled in favor of the women, awarding them $3.3 million in compensatory damages and $250 million in punitive damages. Novartis appealed and then settled the case for $152 million.
In 2010 a federal jury ruled in favor of the women, awarding them $3.3 million in compensatory damages and $250 million in punitive damages. Novartis appealed and then settled the case for $152 million.
All of this is to say that Novartis
had long engaged in less than pristine business practices and got the
impression it could go on doing so with the Trump Administration.