Exjade Specialty Pharmacy Kickback Settlements: More Refills Bought More Patients

Exjade specialty pharmacy kickback settlements included a $370 million civil False Claims Act settlement with Novartis over incentives to promote Exjade refills and Myfortic prescriptions. The revealing detail is what counted as success. A patient who stopped because a doctor ended treatment could still lower a pharmacy’s refill score. If you worked with referral assignments, patient calls or pharmacy contracts, that gap between the clinical decision and the commercial target is the heart of this case.

The network connected Novartis with BioScrip, Accredo and US Bioservices. The pharmacies dispensed Exjade, a drug used to treat iron overload resulting from blood transfusions. Accredo’s admissions describe how Novartis controlled access to new patients and compared how long existing patients kept ordering refills. The resolutions covered both sides of that relationship: the manufacturer offering the incentives and the pharmacies responding to them.

What Is a Pharmaceutical Kickback?

A pharmaceutical kickback is money or another benefit offered or received to induce drug purchases, referrals or recommendations paid for by Medicare or Medicaid. In this case, the government alleged that patient referrals were part of what Novartis gave pharmacies in exchange for promoting Exjade refills.

The pharmacy’s clinical position made that exchange valuable. Patients received recommendations from the business dispensing their medicine. The complaint alleged that Novartis and BioScrip promoted the calling program as patient-focused while concealing its commercial incentives from patients, prescribers and the government. The advice arrived with the pharmacy’s credibility. The manufacturer supplied the reason to push for another order. Patients got a sales pitch presented as care, and taxpayers paid for the refills through Medicare and Medicaid.

How Do Pharmaceutical Kickbacks Work?

Pharmaceutical kickbacks can work through control of future business. In the Exjade network, Novartis could reward a pharmacy with new patients if it kept existing patients ordering the drug. The government’s complaint describes a distribution system built around that control.

According to the government’s complaint, Novartis launched Exjade in 2005 through a closed network of three specialty pharmacies. Its Exjade Patient Assistance and Support Services network included a data vendor that processed incoming prescriptions and allocated patients among the pharmacies.

The complaint describes Novartis’s control over undesignated referrals: patients whose doctors and insurers had not specified a pharmacy. Those referrals brought more than an initial shipment. More patients meant more sales, dispensing fees, reimbursements and manufacturer rebates for BioScrip. Future business was something Novartis could give or withhold.

The complaint describes BioScrip’s specialty mail-order operation and its contract with Novartis. Alongside shipments and refill calls, BioScrip had to report dosage, refill orders and whether physicians had discontinued treatment. That gave the manufacturer a view of what happened after the first prescription. According to the complaint, both companies understood that BioScrip needed patient consent before shipping a refill, even when a doctor had already authorized it. The call sat between the prescription permitting another shipment and the patient agreeing to receive it.

The complaint alleges that Novartis turned this access into a way to make BioScrip promote refills. The company that sold the drug could influence both which pharmacy got the patient and what that pharmacy encouraged the patient to do next.

Refill Scorecards Determined Who Got New Patients

Refill scorecards used to allocate pharmacy referrals measured how long patients continued ordering Exjade. Accredo admitted that Novartis began issuing the monthly scorecards in June 2007 and that the adherence scores included patients who stopped because of side effects or their physicians’ instructions.

Under the plan Accredo agreed to in October 2008, Novartis would allocate 60% of undesignated referrals to the pharmacy with the highest adherence scores and 20% to each of the other two. The Justice Department’s account of Accredo’s admissions connects the ranking directly to the allocation of new business.

The score’s definition matters as much as the allocation formula. A patient following a doctor’s instruction to stop could count against the pharmacy. The measure rewarded continued ordering even when the clinical reason for stopping was already known. Calling it adherence made a sales measure sound like a measure of following medical advice.

The BioScrip complaint makes that distinction explicit. It alleges that both companies understood the score did not measure whether patients followed their doctors’ orders. A Novartis marketing executive described how a doctor’s decision to stop therapy could reduce BioScrip’s score.

The arrangement created a repeating incentive: keep existing patients ordering, rank above the other pharmacies, and receive more patients whose future refills could produce more revenue.

When Stopping Treatment Became a Sales Problem

The government alleged that Novartis knew why some patients stopped refilling: side effects and changes in the patients starting treatment. Its marketing team received data showing that side effects were a major reason for discontinuation. It also recognized a shift toward patients who received transfusions intermittently and had lower iron overload.

According to the complaint, those patients were more likely to stop ordering after several months because their iron levels had nearly normalized. That created a problem for the sales forecast. Novartis made increasing refill rates and restarting patients who had stopped ordering important marketing priorities.

This gives the scorecard’s missing exclusions their meaning. The company had information explaining why a patient might stop, while the pharmacy’s commercial score still rewarded continued orders. Someone who worked on patient data or brand forecasts could see the same discontinuation described as a treatment development in one place and a shortfall against a sales target in another.

BioScrip’s Refill Targets Reached the Phone

The government alleged that Novartis made BioScrip’s access to new patients depend on increasing refill orders. In early 2007, BioScrip’s refill level trailed those of the other network pharmacies. Novartis imposed a performance improvement plan requiring more refills and efforts to restart patients who had stopped ordering.

According to the complaint, the consequence of missing the targets was losing undesignated referrals or removal from the network. BioScrip assigned a newly hired licensed practical nurse, medical assistants and customer service representatives to call patients. The government’s account of the nurse’s preparation shows what the commercial demand meant at the telephone:

An employee who could not distinguish typical from unusual side effects was expected to encourage continued use. The patient heard advice from a pharmacy, while the pharmacy faced a manufacturer-imposed refill target.

The complaint also describes BioScrip’s dedicated Exjade Team and its ScripCare calling protocol. Novartis’s Exjade marketing team reviewed and approved scripts for discussing side effects with new patients. The manufacturer was helping write the pharmacy’s clinical message.

The government also alleged that the financial incentives grew as BioScrip’s refill performance improved. Novartis raised its per-shipment rebate from $13 to $20 starting in January 2008, rewarding earlier refill performance and encouraging continued calls. The complaint describes separate performance rebates tied to shipment thresholds based on Novartis’s national sales target. Patient referrals and payments worked together.

In the BioScrip allegations, the rebate bought the pharmacy’s effort to keep patients ordering. The manufacturer shared marketing goals with the pharmacy, and the pharmacy aligned its refill work with those goals.

The government alleged that the pressure returned when BioScrip’s refill levels dipped in 2011. Novartis cut off undesignated referrals for three months, and BioScrip intensified its effort to restart patients. The threat had become an actual interruption of new business.

When the Warning Changed, the Calls Did Not

Accredo admitted that its nurse-call protocols emphasized the importance of continued treatment while omitting severe risks. Its 2008 protocols told nurses to discuss common reactions such as diarrhea and rash, but left out less common, more serious kidney and liver problems.

In January 2010, the Food and Drug Administration required a black-box warning for Exjade covering kidney impairment, including kidney failure, liver impairment, including liver failure, and gastrointestinal bleeding. The warning stated that some reported reactions were fatal. Accredo updated its call protocols the following month. Those revised protocols still directed nurses to discuss common side effects without the severe kidney and liver risks in the warning.

Accredo also admitted that no Novartis representative asked or suggested that the protocols be revised after the warning. The comparison is between the drug label and the words the pharmacy instructed its nurses to use. A serious change in the safety warning had not produced the corresponding change in the counseling.

US Bioservices supplied another view of the same incentive. In its later settlement account, it admitted training nurses in late 2007 and early 2008 to improve its adherence score. Nurses told patients about severe consequences of untreated iron overload and said common Exjade side effects typically went away with time. They did not use written scripts. Training and what callers actually said therefore matter alongside formal protocols.

The end of Accredo’s arrangement is revealing too. Novartis notified it in late March 2012 that the extra-referral incentive would stop the following month. In April 2012, Accredo stopped assigning nurses to call patients about their Exjade therapy. The additional referrals ended, and the nurse calls ended with them.

Four Companies, Separate Settlements

The settlements reached the manufacturer controlling new business and each pharmacy competing for it.

1. BioScrip: approximately $15 million. The January 8, 2014 announcement described a federal and state resolution over refill counseling influenced by referrals and rebates, with risks understated. BioScrip made extensive factual admissions and agreed to cooperate.

1. Accredo: $60 million. The Justice Department’s May 1, 2015 release described the pharmacy’s settlement and admissions about scorecards, referral allocation and counseling. Accredo also agreed to cooperate against Novartis.

1. Novartis: $390 million overall. The November 20, 2015 announcement described the manufacturer’s resolution over incentives involving both Exjade and Myfortic, including the civil settlement described above. Novartis made extensive factual admissions.

1. US Bioservices: $13.4 million. Its August 23, 2017 resolution addressed another pharmacy’s part in the Exjade network. It made extensive admissions, including its distribution contract and counseling services.

Novartis also agreed to extend its corporate integrity agreement by five years and subject its specialty-pharmacy relationships to independent review. The connected story is the referral network, with each company’s conduct and agreement supplying a different part of it.

Myfortic Rebates Bought Recommendations to Switch

The Myfortic allegations concerned rebates offered to five specialty pharmacies for recommendations to switch drugs. Myfortic is an anti-rejection medicine for kidney transplant recipients. The government alleged that Novartis offered rebates in return for pharmacies recommending to doctors that patients move from CellCept or its generic versions to Myfortic.

That was another way to purchase a pharmacy’s influence. Exjade’s scorecards rewarded continued refills. The Myfortic arrangements sought recommendations that would move patients onto Novartis’s product. Both placed a commercial incentive behind advice presented through a healthcare provider.

The government complaint alleged that the Myfortic pharmacies presented their recommendations as independent professional opinions while failing to disclose the payments behind them. It also alleged that written rebate agreements omitted promises to switch patients or continue recommending Myfortic. For someone who negotiated these arrangements, the correspondence explaining what the manufacturer wanted can say more than the contract’s description of the rebate.

In July 2011, according to the complaint, Novartis offered rebates to Transcript Pharmacy in Mississippi after it promised to recommend switching patients. Transcript then sent faxes to transplant centers recommending a move from generic CellCept to Myfortic for a clinical reason. The faxes did not disclose the pharmacy’s financial incentive.

What Are Red Flags for Pharmacists?

Refill targets tied to new patient referrals, counseling that minimizes serious risks, and commercial expectations missing from the contract are the red flags this case exposes. They connect decisions made in account management to the advice delivered by the pharmacy.

The BioScrip complaint alleges that its contracts omitted the understanding that continued access to referrals depended on refill performance. They also omitted the competition for a larger share of referrals. The working relationship appeared in performance plans, scorecards, emails and allocation decisions even where it was absent from the signed agreement.

The patient information creates another important comparison. The complaint alleged that BioScrip’s system did not track current serum creatinine and serum ferritin levels for most Exjade patients, although a Novartis executive acknowledged that information was needed to advise on continued therapy. The business tracked the refill result while callers lacked information needed to assess the patient’s treatment.

For an insider, those records explain different parts of the same decision. The scorecard defines the result being rewarded. Referral records show how business was allocated. Rebate terms show the financial incentive. Training materials, protocols and patient-call records show how the pharmacy pursued the result. Emails can explain who connected the manufacturer’s sales target to the pharmacy’s work.

The government also followed the shipments into Medicare Part D and Medicaid reimbursement. It alleged that BioScrip submitted claims for Exjade supplied through the kickback arrangement without disclosing the referrals and rebates behind it. That is the government-payment connection in the False Claims Act case: the pharmacy’s commercial arrangement reached the programs paying for patients’ drugs.

A whistleblower brought the qui tam case, and the government joined it. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Someone who knows how the referral decision, patient call and reimbursement fit together may understand the scheme across departments that each see only part of it.

When the Referral Depends on the Refill

If your pharmacy’s next patient depends on keeping the last one ordering, speak with our whistleblower experts about the arrangement. We connect your knowledge of referral decisions and patient counseling to a case strategy, bring in pharmaceutical fraud whistleblower lawyers who understand specialty-pharmacy kickbacks, and stay beside you through the case.