Serono to Pay $704 Million for Deceptive Aids Drug Sales

Health Care Fraud

Swiss biotechnology firm Serono has agreed to pay the U.S. government $704 million to resolve criminal and civil charges that it illegally promoted the sale of Serostim, a growth hormone used to treat profound weight loss in AIDS patients.

Serono, which took a $725 million charge against earnings in April in anticipation of fines and costs to cover its guilty plea, says in a statement that “we are pleased to put the matter behind us.” The firm’s U.S. general counsel, Thomas G. Gunning, asserts that Serono “takes compliance issues very seriously.” In the firm’s defense, he says that “the activities described in the settlement were confined to one unit in our U.S. operations and cover a brief period in our history.”

According to the U.S. Department of Justice, Serono’s drug was approved in 1996. At the same time, protease inhibitors, used in combination in an AIDS drug cocktail, came on the market and dramatically reduced the incidence of the weight-loss condition known as AIDS wasting.

As demand for Serostim slipped, Serono and a partner introduced what Justice calls “an unapproved bioelectrical-impedence software package” to calculate body cell mass and artificially increase a diagnosis of AIDS wasting—along with Sero-stim sales.

In addition, Justice charges that Serono induced physicians to write new prescriptions for Serostim in exchange for an all-expense-paid trip to a medical conference in Cannes, France. Serostim cost $21,000 per treatment course. In all, the Justice Department says, Serono garnered more than $90 million in profits from the illegal schemes.