Is Novartis a Victim or the Villain: Perhaps Both?
[Thursday, August 15, 2019]

Last couple of weeks would have been a nightmare for a crisis manager working for Novartis. The company has been accused of fraud by FDA and threatened with fines and other punitive actions, investigated by the US Congress, subject to public ridicule, and apparently deceived by its acquisition target. In all that, one cannot forget that the product in question is the most expensive drug in the world priced at $2.125M per treatment with a projected market of about $2 billion per year. First this first, Novartis’s excuse that it wanted to complete its internal investigation of the fraud before letting FDA know is a lame excuse. It is regulatory 101 to never hide critical information like this from FDA. It was one non-clinical study among a trove of data submitted to the FDA in support of the market approval application. Even FDA is on record that the manipulated data does not change the overall decision, so the decision to hide the information was a not made for regulatory process reasons but for business considerations. The timing of the decision to not tell FDA makes this even more suspect. FDA was weeks away from approving the treatment and the “internal investigation” just dragged it long enough to get the FDA decision, announce the most expensive drug, get the stock a decent bump and then tell FDA. If all this sounds very cynical, it probably is. It is true that Novartis may not have known or encouraged the fraud at AveXis, but it did find out about it at the most inopportune time. One can imagine the discussions in its board rooms where the marketing team was salivating over releasing this once in a lifetime announcement, and when told that a nifty piece of information could potentially push the FDA approval a bit further, they made a business decision to delay telling FDA till after the FDA positive decision. Afterall, everyone knows that once FDA approved the drug, it would very unlikely for FDA to pull the approval afterwards despite knowing about the fraud. And that’s exactly what happened. FDA fumed over the information but still announced that it stands by its decision to approve the treatment. The Congressional investigations are political hubris as best which will die out once the news is no longer on the front page. Novartis claims to have fired the responsible people and would look to wait out the storm. The company can withstand the negative news and the treatment will stay in the market. In the end, Novartis may play the victim in public but in reality, it played the best game of deception. And we will all watch it get away with it. Cynical it is.