Serono Laboratories agreed yesterday to pay $704 million and plead guilty to federal charges that it conspired to increase the market for the AIDS drug Serostim by offering kickbacks to doctors and manipulating a test for AIDS patients.
Eighty-five percent of prescriptions for Serostim, accounting for roughly $615 million in sales, were unnecessary, said Michael Sullivan, the U.S. attorney in Boston who led a four-year investigation into the marketing of the drug.
The cost of many of those prescriptions, at $21,000 for 12 weeks, was paid by Medicaid and other government insurance plans.
Serostim is used to treat AIDS wasting, an often fatal condition involving severe weight loss. The demand for the drug dropped in the late 1990s with the advent of "cocktails" of AIDS drugs that made patients less susceptible to wasting.
The investigation grew out of whistle-blower lawsuits filed by U.S. employees of Swiss-based Serono. The result was the third-largest U.S. health care fraud settlement on record: a criminal fine of $136.9 million and civil penalties of $567 million.
"Serono put its desire to sell more Serostim above the interests of patients and the public," Attorney General Alberto R. Gonzales said at a news conference.
No doctors have been charged. Sullivan would not comment on whether the ongoing investigation is looking at doctors' actions.
As part of the plea, Serono will be barred from federal health programs for five years, although company officials said Serostim and other Serono products will remain eligible for reimbursement under federal insurance programs.
Thomas G. Gunning, Serono's U.S. vice president, said, "The activities described in the settlement were confined to one unit in our U.S. operations and cover a brief period in our history." Serono's U.S. headquarters is in Rockland, Mass.