Biotechnology company Serono will pay $704 million (SFr910 million) in fines after admitting to illegally marketing its Serostim Aids drug in the United States.This content was published on October 17, 2005 - 22:15
The settlement closed a four-year investigation by the US authorities into its subsidiary Serono Laboratories, which was guilty of offering kickbacks to doctors to prescribe Serostim.
The US Department of Justice (DOJ) said the case was the third largest healthcare fraud recovery in the country.
Under the terms of the deal, Serono will pay $567 million to settle civil liabilities and $136.9 million as a criminal fine.
Serono Laboratories will also be excluded from all US healthcare programmes for at least five years.
In addition, nearly $52 million will be shared by five whistleblowers, who helped blow the lid off the company's activities.
Serotim was approved for use against muscle-wasting in Aids patients in 1996 in the US.
The DOJ said in a statement released on Monday that the fines were designed to ensure that US agencies would "recoup all monies paid based on Serono's illegal activity".
"Serono abused the system of testing and approval, and put its desire to sell more drugs above the interest of patients," US Attorney General Alberto Gonzales said.
Amongst other charges, Serono Laboratories admitted it was guilty of offering doctors an all-expenses paid trip to a medical conference in Cannes, France, in return for writing up to 30 new prescriptions for Serotim, at a cost of $21,000 per course of treatment.
For its part, Serono said it was pleased that the matter had been closed.
"The activities... were confined to one unit in our US operations and cover a brief period in our history," said Thomas Gunning, vice-president of Serono US.
The biotech giant was clearly prepared for the grandeur of the fine; in April this year it booked an exceptional charge of $725 million in its first quarter earnings to cover the settlement and related costs.
At the time Serostim was approved, muscle-wasting was the leading cause of death of AIDS sufferers.
However, Serono's drug came onto the US market at the same time as protease inhibitor drugs came on the scene, which revolutionised the Aids' treatment and helped to reduce the progress of the syndrome.
"As a result, the incidence and prevalence of Aids wasting began to markedly decline and the demand for Serostim dropped significantly immediately after its launch," the DOJ said, leading Serono Laboratories to engage in a marketing and sales campaign to turn around Serostim's flagging fortunes.
Geneva-based Serono is Europe's largest biotechnology company with over 4,900 employees.
It generated worldwide revenues of $2.46 billion and a net income of $494 million in 2004.
It is the world's third largest biotech concern.
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