January 10, 2006
CURRAN RECOVERS $922,000 FOR MARYLAND MEDICAID PROGRAM
Maryland Attorney General J. Joseph Curran, Jr. announced today
that Maryland has joined with 41 other States and the District
of Columbia in a $262 million dollar settlement of State Medicaid
fraud claims against Serono, S.A., a Swiss Corporation. Serono
S.A. is the manufacturer of Serostim, a drug approved to treat
HIV wasting, an AIDS-related syndrome. The settlement was negotiated
by representatives of the Department of Justice, the U.S. Attorneys
Office in Boston, the Office of the Inspector General of Health
and Human Services and the National Association of Medicaid Fraud
Control Units (NAMFCU) which represented the State Medicaid Fraud
Control Units in the negotiations. The company operates in the
United States through its affiliates Serono Inc. and Serono Laboratories,
Inc., both which have their principal place of business in Rockland,
As part of the settlement, the State of Maryland’s Medicaid
program will receive a total of $922,915.00 to address Serono’s
conduct in marketing Serostim. State Medicaid programs paid claims
for the drug between 1997 and 2004 that were not eligible for reimbursement
because they were generated by the use of unapproved testing devices,
were for unapproved uses, or were induced by kickbacks. Medicaid
programs are federally and state funded.
Serono, S.A. together with its U.S. subsidiaries and related entities
agreed to pay a total of $704 million dollars to resolve criminal
charges and civil liabilities in connection with these illegal
schemes to promote, market and sell Serostim. That sum consists
of a $136.9 million criminal fine and $567 million, including the
$262 million state recovery, for total federal/state Medicaid damages.
Serono Laboratories agreed to plead guilty to the following:
• Promoting Serostim for uses not approved
by the FDA, including lipodystrophy and body cell mass wasting.
• Using unapproved software in connection with tests to
determine patients’ need for Serostim. The states alleged
that the software was intended to result in greater utilization
of the drug.
• Paying illegal kickbacks to pharmacists
and physicians in an effort to increase sales of Serostim. The
payments and travel expenses, including trips to Cannes, France.
As a result of its criminal conviction, Serono Laboratories will
be excluded from all federal healthcare programs for at least five
years. Serostim will remain eligible for reimbursement by state
Medicaid programs. Serostim is approved by the FDA to treat AIDS
wasting syndrome, which is marked by the involuntary loss of significant
body weight and chronic weakness and other forms of cachexia, a
wasting away of body fat and muscle caused by disease. The drug
cost Medicaid programs approximately
$6,000 per month per patient. The suggested course of treatment
is three months, but many patients have used Serostim much longer.
This global federal and state settlement is a result of federal
False Claims Act (FCA) qui tam actions filed in Massachusetts,
Connecticut and Maryland in 2000 by a former Serono employee. The
civil settlements with Serono will also subject all its U.S. affiliates
to a Corporate Integrity Agreement with the Office of Inspector
General, U.S. Department of Health and Human Services to ensure
future compliance with the law. Serono was also required to cooperate
with the states in any related investigations they may undertake.
NAMFCU negotiating team members were the Directors of Maryland
and Missouri MFCUs, and Assistant Attorneys Generals from the Florida,
Massachusetts and New York MFCUs.