Novartis is poised to pay up to $700 million to settle allegations that the drugmaker used perks like expensive dinners to lure doctors to prescribe its medications.
The Switzerland-based firm has denied any wrongdoing in the lawsuit that stems from events held between 2002 and 2011, which the company marketed as educational sessions but the federal government says violated anti-kickback laws.
Still, Novartis is setting aside the funds as part of its “efforts to resolve legacy compliance issues,” CEO Vas Narasimhan said on Thursday.
“Right now we’re working in settlement discussions to resolve the civil suit,” he told investors on the firm’s second-quarter earnings call.
Outside of its legal challenges, Novartis is facing pressure over its newest treatment for spinal muscular atrophy. Known as Zolgensma, the drug for babies has a price tag of $2.1 million. To reduce the cost, the firm is offering insurers an option to pay for the medication over five years.
Novartis reported profits of $2.1 billion, or $1.34 per share, in the three months through June, a 73 percent decline year-over-year largely due to GlaxoSmithKline’s 2018 purchase of Novartis’ stake in the drugmaker’s consumer health unit.
Overall, sales rose 4 percent to $11.8 billion. Novartis increased its full-year outlook on the positive results, telling investors that sales are expected to grow in the “mid to high-single digits,” while operating income is predicted to experience double-digit percentage growth.