Vas Narasimhan, Novartis CEO (Photographer: Jason Alden/Bloomberg via Getty Images)

No­var­tis fails to win ap­peal in whistle­blow­er case in­volv­ing can­cer drug study

A state rul­ing was hand­ed down to No­var­tis on Mon­day, and not in the Big Phar­ma’s fa­vor.

The rul­ing from New Jer­sey’s Su­pe­ri­or Court, Ap­pel­late Di­vi­sion from ear­li­er this week up­held a tri­al court’s rul­ing against No­var­tis from 2019 that man­dat­ed that a for­mer com­pa­ny ex­ec-turned whistle­blow­er be paid a net amount of ap­prox­i­mate­ly $1.5 mil­lion.

The ap­peal, heard by a 3-judge pan­el, was ar­gued be­fore the court on Feb­ru­ary 3rd as both par­ties ap­pealed cer­tain el­e­ments and judge­ments in the case.

There’s a bit of his­to­ry in this case — back in 2012, for­mer No­var­tis ex­ec Min Amy Guo, ex­ec­u­tive di­rec­tor of No­var­tis’s health eco­nom­ics and out­comes re­search group, ex­pressed con­cerns that a po­ten­tial can­cer study for Afin­i­tor, run by McKesson, could vi­o­late a fed­er­al an­ti-kick­back law. She was ter­mi­nat­ed the fol­low­ing year as No­var­tis al­leged she had vi­o­lat­ed com­pa­ny pol­i­cy, and in 2014 she filed suit against No­var­tis un­der New Jer­sey’s CEPA law (Con­sci­en­tious Em­ploy­ee Pro­tec­tion Act).

In 2019, a New Jer­sey state ju­ry found No­var­tis guilty of re­tal­i­a­tion and award­ed Guo more than $1.8 mil­lion in a 7-1 vote. How­ev­er, the ju­rors unan­i­mous­ly al­so award­ed $345,000 to No­var­tis on the com­pa­ny’s claim of un­just en­rich­ment, a le­gal doc­trine where a par­ty gets ben­e­fit at an­oth­er’s ex­pense with­out that part get­ting prop­er resti­tu­tion un­der the law.

This sec­ond ver­dict was based on the ju­ry’s find­ing that Guo had vi­o­lat­ed com­pa­ny pol­i­cy, which No­var­tis had coun­ter­claimed. Be­yond that sec­ond ver­dict, the ju­ry de­nied grant­i­ng Guo puni­tive dam­ages.

To this week’s rul­ing. No­var­tis, among oth­er things, ar­gued in its ap­peal that Guo did not iden­ti­fy any il­le­gal con­duct or en­gaged in “pro­tect­ed ac­tiv­i­ty,” aka blow­ing the whis­tle. How­ev­er, the judges re­ject­ed No­var­tis’s ar­gu­ments, not­ing in its 57-page opin­ion:

We re­ject, as did the tri­al judge, de­fen­dant’s as­ser­tion that the proofs were in­suf­fi­cient to es­tab­lish plain­tiff’s rea­son­able be­lief that the law was be­ing vi­o­lat­ed. Plain­tiff’s tes­ti­mo­ny and doc­u­men­tary ev­i­dence showed that she had specif­i­cal­ly voiced to Wu and Lu­cas her be­lief that the McKesson study was a kick­back that vi­o­lat­ed the CIA (cor­po­rate in­tegri­ty agree­ment), which in turn was de­signed to en­sure com­pli­ance with the AKS (An­ti-Kick­back Statute).

Judges al­so not­ed that Guo re­ceived train­ing on the poli­cies af­ter No­var­tis had been sanc­tioned by the feds for pre­vi­ous­ly vi­o­lat­ing the False Claims Act and the an­ti-kick­back statute. Her take­away, said the judges, was that a com­pa­ny could vi­o­late the AKS by “pay­ing a dis­trib­u­tor for a study of neg­li­gi­ble sci­en­tif­ic val­ue as a kick­back for pur­chas­ing and dis­trib­ut­ing its prod­uct.” It was al­so men­tioned in the rul­ing that oth­er em­ploy­ees shared her per­cep­tion that ap­proval of the study might be im­prop­er.

“The tri­al judge cor­rect­ly con­clud­ed that the ev­i­dence was suf­fi­cient to sup­port an in­fer­ence that plain­tiff’s be­lief had been ob­jec­tive­ly rea­son­able,” the ap­peal went on to say.

Guo had al­so ap­pealed, say­ing among oth­er things that the orig­i­nal judge’s rul­ing on un­just en­rich­ment should be re­versed and that the judge “com­mit­ted re­versible er­ror in the puni­tive dam­ages tri­al.” The judges de­nied re­vers­ing the un­just en­rich­ment case, cit­ing no er­ror in the orig­i­nal judge’s de­ci­sion as re­lat­ed to that spe­cif­ic ver­dict — and al­so not­ed “no abuse of dis­cre­tion” as it re­lates to the puni­tive dam­ages part of the tri­al.

A No­var­tis spokesper­son tells End­points News that the com­pa­ny is dis­ap­point­ed in the court’s de­ci­sion, adding:

We are not sur­prised to see that the Ap­pel­late Court up­held the ju­ry’s de­ter­mi­na­tion that Ms. Guo vi­o­lat­ed com­pa­ny pol­i­cy, en­ti­tling No­var­tis to the monies due un­der its un­just en­rich­ment coun­ter­claim. While tak­ing some time to ful­ly com­pre­hend the Ap­pel­late Court’s de­ci­sion, we con­tin­ue to be­lieve that there was no ev­i­dence to sup­port a judg­ment against No­var­tis, and we will pur­sue all op­tions to ad­dress the out­come in this case.

“The com­pa­ny is com­mit­ted to tak­ing ap­pro­pri­ate ac­tion – in­clud­ing ter­mi­nat­ing em­ploy­ment when nec­es­sary – should an em­ploy­ee refuse to com­ply with com­pa­ny pol­i­cy,” the spokesper­son fur­ther not­ed.

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