Here’s Why Novartis’ Japanese Unit Was Raided


Last month, the Japanese Health Ministry filed a complaint against Switzerland-based drugmaker Novartis AG’s (NYSE:NVS) Japan unit after the company used allegedly false data to advertise for its best-selling blood pressure drug, Diovan, the Wall Street Journal reports.

Reuters reports that prosecutors in Tokyo broke into the company’s offices in Japan on Wednesday as part of a criminal investigation of the company following charges that the drugmaker violated the law by releasing misleading advertisements.

The advertisements in question cited research which the Japanese Health Ministry says were manipulated to support the company’s claims regarding Diovan’s benefits; the studies were originally conducted by researchers at Japanese universities and were later found to have been falsified, possibly by a Novartis employee who participated in all of the studies without ever acknowledging his affiliation with company.

A spokesperson for Novartis’ Japanese unit declined to comment, although Novartis has said in a statement that it will “cooperate fully with the prosecutors’ investigation,” according to Reuters.

The potential penalties should the Swiss drugmaker be found guilty are rather light, however, if Novartis is found guilty of misleading advertising for Diovan the company would face a fine of up to 2 million yen or approximately $19,500 and the employees involved could face prison sentences as long as two years, per the Wall Street Journal.

More concerning is the effect the investigation will have on the company’s reputation in Japan, especially considering this isn’t the first or only allegation of manipulated data. Last month, the company’s Japan unit violated protocol during trials of its experimental cancer drug Tasigna, leading to accusations of tainted data in those studies.

Diovan ranked as Novartis’ leading product in 2010, and has consistently been a huge driver of the company’s sales. In the past few years, the drug has begun to loose patent protection, leading the product’s sales to dwindle. Diovan’s faltering sales has provoked the company to push its sales harder while Novartis begins to shift its focus on newer medicines, such as the cancer drug Afinitor and a multiple sclerosis pill called Gilenya.

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