Novartis – Reference pricing class action goldmine
The strategy to boost profits by allegedly bribing for better reference prices in Greece may rapidly become very toxic. Novartis problems in Greece will pale once other European Governments and patient advocacy groups begin launching class actions against Novartis for issues around the alleged reference pricing swindle.
Through alleged bribes in Greece, Novartis obtained high prices for its drugs in Greece and therefore also in Europe as Greece is “reference country” for the price setting.
Simply explained: Reference pricing was an attempt to keep a cap on the price of a pharmaceutical product. Thus if you can obtain a high reference price in a country where the drug is possibly first introduced, then you open the door to fantastically greater profits. Thus if in most European countries you know your new tablet would be 2 euro per piece by the local health authorities, but you can bribe a Greek official that they allow it on the market for 8 euro per tablet, then you can force this price across all European countries. And thus the profits are magnified.
Summa summarum: Novartis could be liable for tens of billions of dollars in fines all across Europe for selling drugs overpriced by the misbehavior in Greece. If this is also prosecuted in the USA, then the problem is further massively amplified.
Newer information from the investigation today: the Novartis kickbacks scandal became known towards the end of 2016. The investigation was also assisted by the US FBI. There are several eye-witnesses, former employees at Novartis, who were willing to testify in exchange for protection and possibly decreased sentences. Two Novartis senior executives in Greece informed authorities that “Novartis had used unfair methods to improve the company’s position in the Greek market for many years.” That also Novartis had bribed over 4’000 doctors and many public officials in order to boost prescriptions and consequently sales at the cost of public spending and the Greek social security fund.
