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U.S. seeks up to $3.35 billion in Novartis kickback lawsuit

By Jonathan Stempel

NEW YORK (Reuters) - The United States says Novartis AG (NOVN.VX) should pay as much as $3.35 billion in damages and civil fines because the Swiss drugmaker used kickbacks to boost sales of two drugs covered by Medicare and Medicaid.

In papers filed Monday night in Manhattan federal court, the government said it deserves that sum under the federal False Claims Act over alleged improper reimbursements for Exjade, used by patients who receive blood transfusions, and Myfortic, for patients with kidney transplants.

The government is seeking up to $1.52 billion in damages, representing triple the sums allegedly reimbursed and tainted by kickbacks between 2004 and 2013.

It also wants as much as $1.83 billion in fines, equal to $5,500 to $11,000 for each of the 166,031 allegedly false claims submitted for reimbursement.

Novartis "continues to dispute the allegations and is continuing to defend itself in this litigation," company spokeswoman Julie Masow said. "We look forward to a full presentation of all of the evidence during the trial."

The company has offices in East Hanover, New Jersey.

A jury trial is scheduled to begin on November 2 and could last several weeks, court papers show. The government often settles False Claims Act cases before trial.

Novartis is being sued by the federal government, 11 intervening U.S. states, and David Kester, a whistleblower and former Novartis respiratory account manager acting on behalf of 17 other states.

The lawsuit accuses Novartis of paying kickbacks, in the form of rebates, to three specialty pharmacies to induce them to recommend refills of Exjade, which is intended to reduce iron levels in patients.

It also accuses the drugmaker of offering similar rebates to five other pharmacies to induce them to recommend Myfortic, an immunosuppressant, over rival drugs including Roche Holding AG's (ROG.VX) CellCept and generic equivalents.

The intervening states also alleged state law claims with respect to Exjade.

The case is U.S. v. Novartis Pharmaceuticals Corp, U.S. District Court, Southern District of New York, No. 11-08196.

(Reporting by Jonathan Stempel; Additional reporting by Nate Raymond; Editing by Dan Grebler)