Criminal Prosecution of Serono, S.A.

' The Swiss corporation Serono, S.A., one of the world's largest biotech manufacturers, paid $704 million to resolve criminal charges and civil liabilities in connection with several illegal schemes to promote and sell its drug, Serostim, that resulted in the submission of false claims to Medicaid and other federally funded health care programs. The Food and Drug Administration (FDA) had granted accelerated approval for Serostim in 1996 to treat Auto-Immune Deficiency Syndrome (AIDS) wasting, a condition involving profound involuntary weight loss in AIDS patients, then a leading cause of death in AIDS patients. Following the advent of protease inhibitor drugs, the incidence of AIDS wasting markedly declined, and Serono launched a campaign to redefine AIDS wasting to create a market for Serostim. While doctors are permitted to prescribe drugs for uses that are not approved by the FDA, pharmaceutical companies are prohibited from marketing drugs for unapproved, or "off-label" uses.

Serono pled guilty to conspiring with RJL Sciences, a medical device manufacturer, to introduce on the market bioelectrical impedance analysis (BIA) computer software packages for use in measuring body cell mass and diagnosing AIDS wasting. The FDA had not approved the BIA software packages for these uses. RJL and its owner also pled guilty to their roles in the conspiracy. In addition, Serono pled guilty to conspiring to offer doctors kickbacks in the form of free trips to Cannes, France, to induce them to prescribe Serostim.

The $704 million Serono settlement consisted of $305 million (plus accrued interest) paid by Serono to resolve FCA allegations that it knowingly caused the submission of claims for Serostim that were not eligible for reimbursement because they were for unnecessary or unapproved uses and because the claims were for prescriptions induced by kickbacks to physicians and pharmacies. It also included $262 million plus interest paid to state Medicaid programs, as well as $136.9 million in criminal fines.

Source: HHS Health Care Fraud and Abuse Control Program, Annual Report for FY 2006

This article was posted on July 15, 2012.

Links to Recommended Companies