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Serono to Admit Guilt in AIDS Drug Case

The company will pay $704 million to settle charges it improperly marketed Serostim.

October 18, 2005|From Reuters

WASHINGTON — Swiss biotech company Serono has agreed to plead guilty and pay $704 million to resolve criminal and civil charges that it illegally promoted its AIDS drug, the Justice Department said Monday.

Serono will plead guilty to two criminal charges and pay a $137-million fine, resolving an investigation into how the company marketed the drug, called Serostim, approved by the Food and Drug Administration in 1996 to treat wasting in AIDS patients.

Geneva-based Serono also will pay $567 million to settle civil charges that it knowingly caused the submission of false claims for Serostim that were not eligible for reimbursement under government health programs, the U.S. Justice Department said.

"Serono put its desire to sell more Serostim above the interests of patients and the public," Atty. Gen. Alberto R. Gonzales said. "Medical judgments were corrupted by the marketing tactics."

Serono stock closed down 1.2% in European trading Monday. The company had announced in April that it was taking a $725-million charge to cover the cost of the Serostim investigation.

Gonzales said the company made more than $90 million in profit during the period of illegal activity. The Justice Department said the activity occurred from at least 1996 to 2004.

Serono tried to redefine AIDS wasting in its promotion of the drug and about 85% of prescriptions written were unnecessary, according to Michael Sullivan, the U.S. attorney for Massachusetts.

"Serono generated millions of dollars in profit by flouting our healthcare laws, rules and ethics, in a comprehensive effort to create a market for its expensive drug Serostim," he said.

The criminal charges included conspiracy and giving doctors expenses-paid trips to Cannes, France, for a medical conference in 1999 where they agreed to write as many as 30 prescriptions for Serostim, typically costing $21,000 for a 12-week treatment.

Serono said the activity was confined to one unit of its U.S. operations.

"Serono takes compliance issues very seriously and has a rigorous compliance program to ensure that its employees meet the highest ethical standards," Thomas Gunning, vice president and general counsel at Serono U.S., said in a statement.

Four former Serono sales and marketing executives were indicted in April on charges of conspiracy to provide kickbacks to doctors to encourage them to write Serostim prescriptions. These charges are still pending, the Justice Department said.

The Serono Labs unit will be excluded from all federal healthcare programs for at least five years.

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