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.