October 17, 2005
DOJ & Serono - Agreement
According to a DOJ press speech here, the government and Serono Labs (Swiss Company with U.S. subsidiaries) have reached an agreement where "Serono will pay to the Medicaid program hundreds of millions of dollars it collected through the fraudulent marketing and sale of a drug called Serostim." Serostism assisted with weight loss resulting from AIDS. Attorney General Alberto Gonzalez stated:
"When the demand for the drug Serostim began to wane, Serono put a fraudulent marketing and promotion campaign into high gear. It introduced unapproved computer software that helped increase the diagnosis of the AIDS wasting condition – and thus artificially increased the market for Serostim. It also offered financial incentives to doctors -- such as all-expense paid trips to Cannes, France -- in return for their prescribing a certain amount of the expensive drug. Such incentives are illegal and dangerous because they interfere with how doctors exercise their medical judgments in deciding on the best treatments and care for their patients."
The settlement provides that:
"Serono Labs has agreed to plead guilty to two counts of criminal conspiracy and resolve civil liabilities in connection with several illegal schemes. Serono will pay more than 704 million dollars in fines and damages and they have agreed to the terms of a sweeping corporate compliance program that will ensure this illegal activity does not occur again in the future."
It sounds like the company was prepared for a hefty fine as Serono's press release states that:
"In April 2005, the company announced that it had taken a $725 million provision to cover the settlement and related costs. The provision, which was recorded as an exceptional charge in the company’s earnings report for the first quarter of 2005, will be sufficient to cover the comprehensive settlements and related costs. The comprehensive settlements also include a Corporate Integrity Agreement, administered through the Office of the Inspector General."
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