Friday, April 15, 2005

Four Former Sales Executives at Serono Laboratories Indicted for Offering Kickbacks to Doctors

The United States Attorney's Office for the District of Massachusetts (Boston) announced the indictment of four former U.S. sales executive of Serono Laboratories Inc., a biotech company headquartered in Switzerland, for offering doctors and their guests an all-expense paid trip to Cannes -- for a  medical conference, of course -- if they would write prescriptions for the company's AIDS wasting drug, which cost $21,000 for a full cycle of medication.  A press release (here) issued by the USAO describes the indictment of John Bruens, Mary Stewart, Melissa Vaughn, and Marc Sirockman, in connection with the plan to pump up sales of Serostim, which were well below the company's sales goals:

According to the Indictment, by February, 1999, the Serono business unit responsible for selling Serostim, Metabolic & Immune Therapy ("M&IT"), was falling short of its sales goals. At that time, the sales force was lead by six Regional Directors, including VAUGHN and SIROCKMAN. According to the Indictment, in March, 1999, BRUENS, STEWART and another identified in the Indictment as Executive X, a top executive in M&IT, summoned the six Regional Directors, including VAUGHN, SIROCKMAN and Adam Stupak, Regional Director for New York City, to a meeting in Boston, Massachusetts, where they were told that they were falling far short of their sales goals and needed to "dig their way out"of this fiscal crisis. The Indictment alleges that BRUENS, STEWART and Executive X ordered the Regional Directors to target select doctors to induce them to write more prescriptions related to a sales plan called the "$6m-6 Day Plan" - meaning that each Regional Director, including VAUGHN, SIROCKMAN and Stupak, were required to identify the highest prescribing physicians or "thought leaders" in their regions and target those physicians with financial incentives in order to get the required number of prescriptions to achieve the sales goal of $6 million in 6 days.

The Indictment alleges that part of the "$6m-6 Day Plan" was to offer key high prescribing doctors an all-expenses paid trip for the doctor and a guest to attend the 3rd International Conference on Nutrition and HIV Infection being held in Cannes, France for three days in April, 1999, in return for writing additional prescriptions, up to thirty, of Serostim. The cost of each prescription of Serostim induced by the offer of the trip to Cannes was for a twelve-week course of treatment valued at approximately $21,000, thus the market value of thirty scripts written by each doctor was $630,000.

One former Serono executive, Adam Stupak, entered a guilty plea in December 2004 and is cooperating in the investigation, and "Executive X" is likely cooperating too. (ph)


UPDATE (5/3/2007): The four defendants were found not guilty on May 3, 2007.

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