Novartis Faces Criminal Charges in Japan Diovan Scandal

Novartis Faces Criminal Charges in Japan Diovan ScandalLast year, Japanese whistleblowers exposed the falsification of trial data for Diovan – Novartis’ blockbuster blood pressure drug. Ultimately, the ensuing investigation led to the arrest of one man, Nobuo Shirahashi, who was accused of manipulating the Diovan data and skewing the clinical research published by two Japanese universities.

Last month, Shirahashi was detained for questioning and then recently re-arrested only days ago as more evidence emerged to link him to the falsified test results. Now, it seems both Novartis and its ex-employee with face criminal charges for misleading consumers about the range of Diovan’s therapeutic powers.

Exaggerated Claims

Novartis’ Japanese subsidiary, Novartis Pharma KK first found itself in hot water with Japanese authorities over claims of false advertising.  It seems Diovan’s test data was contrived to portray the drug as not only an effective treatment for blood pressure, but also as a method for preventing stroke and angina. In January 2014, Japan invoked a clause in their pharmaceutical law that bans false or misleading advertising, asserting that there was no actual proof of Diovan’s preventative powers, and that the data used to support them was manipulated by Shirahashi.

Competitive Pressure

It’s been suggested that Shirahashi interfered with Diovan’s pharmaceutical testing in order to give the drug a competitive edge. There are plenty of drug pressure medications on the market, and the ex-employee thought that by extending Diovan’s therapeutic reach, Novartis could differentiate itself to consumers. Several highly regarded journals published studies based on the false data, such as the renowned European Heart Journal, which has been forced to retract its research.

Double Charges

Even though Novartis has determined that Shirahashi acted alone and admits no knowledge of his deceit, the Swiss drugmaker is being held accountable for the actions of its former employee. Japan law features a dual liability clause that ensures companies pay for failing to oversee their workers – in this case, the maximum penalty is just under USD$20,000. The fine may seem like small change for Big Pharma, but Novartis will feel the sting reputationally if not financially.

Novartis Gets Tough

In order to restore faith in the integrity of its quality assurance and control, Novartis has cracked down on its Japanese division. It issued a sweeping paycut to all executives – around 30 percent, and actually replaced some of Novartis Pharma KK’s senior management.  In April, Novartis also instituted a series of corrective measures, such as remedial training for staff, and a third party review of its testing protocols. David Epstein, Global Division Head of Novartis Pharmaceuticals says, “We are committed to changing the culture at NPKK and demonstrating ethical leadership among pharmaceutical companies in Japan.”

As for Shirahashi, if convicted he faces ¥2 million ($19,541) in fines or a prison sentence of up to two years.

Do you think ethical breaches like this one are inevitable given the highly competitive, profit-driven business of Big Pharma?