Serono to Pay $704 Million Settlement for Price, Marketing Fraud of AIDS-Related Drug Serostim
October 18, 2005
The Swiss biotechnology company Serono on Monday agreed to pay $704 million to settle a Department of Justice investigation into the company's sales and pricing practices of its drug Serostim, which is used to treat AIDS-related wasting, the New York Times reports (Lichtblau, New York Times, 10/18). The settlement amount is the third-largest for health care fraud and the largest-ever settlement for Medicaid fraud, according to DOJ (Squeo/Armstrong, Wall Street Journal, 10/18). The company will pay $136.9 million in criminal fines and $567 million to settle civil liabilities, which includes $305 million to federal agencies that paid for unnecessary prescriptions for the drug and almost $262 million to state Medicare programs. The company also will plead guilty to two criminal charges of conspiracy (Kerber/Savage, Boston Globe, 10/18). Serono in April said it would pay up to $725 million after DOJ indicted four former Serono executives for allegedly bribing physicians to prescribe Serostim, which many HIV/AIDS patients receive through joint federal-state Medicaid programs that include the medication in their drug formularies (Kaiser Daily HIV/AIDS Report, 9/22). As part of the settlement, Serono also agreed to a corporate compliance plan that includes internal audits and government monitoring (Leinwand, USA Today, 10/18). The company also is prohibited from participating in federal health programs for five years, although Serostim and other Serono products manufactured by other company units will remain eligible for reimbursement under federal insurance programs (Sherman, AP/Boston Globe, 10/17).
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