Major Drug Company Pays $44 Million to Settle Kickback Claims

EMD SeronoSwiss biotech giant EMD Serono Inc. agreed to pay $44.3 million last month to settle federal charges of kickbacks that resulted in the submission of false claims to Medicaid and Medicare for its multiple sclerosis drug Rebif.

Serono was accused by the U.S. federal government and a number of states of violating the False Claims Act, a federal law aimed at companies that defraud governmental programs. Serono, government attorneys said, essentially paid doctors to prescribe Rebif to patients suffering from multiple sclerosis.

"Health care decisions must be based solely upon what is best for the individual patient and not on which pharmaceutical company is paying the doctor the biggest kickback," Rod J. Rosenstein, U.S. attorney for the District of Maryland, said in a statement."All consumers have the right to know that their health care provider's judgment about medications they should take has not been undermined by kickbacks from pharmaceutical manufacturers," Rosenstein added.

Rebif was launched in 2002, and from then until 2009, the Justice Department alleged, Serono paid medical professionals to promote and prescribe the drug to treat relapsing forms of multiple sclerosis.

Serono, the Justice Department asserted, paid health care professionals for speaking engagements and attending training, advisory, consultant and marketing meetings -- many of which were held at lavish resorts and upscale urban locations -- designed to promote Rebif.

All of these actions, government attorneys said, resulted in false claims for Rebif to federal health care programs such as Medicare and Medicaid -- claims that were tainted by kickbacks.

"It's imperative that medical determinations are guided by a patient's needs, not tainted by illegal incentives or fraud," Tony West, assistant attorney general of the civil division, said in a statement. "We are committed to ensuring that the chronically ill and other vulnerable members in our communities who rely on Medicare and Medicaid programs receive the best possible care."

In a press release issued by the company, Serono stressed the fact the settlement did not require the company to admit any wrongdoing.

"It is important to note that the settlement contains no claims that unnecessary prescriptions for Rebif were written, no allegations of patient harm and no admission of fault by the company," Thomas G. Gunning, senior vice president and general counsel for EMD Serono Inc.. said in a statement. "EMD Serono is committed to operating its business with the highest legal, compliance and ethical standards."

The federal government will receive $34.6 million of the $44.3 million settlement, with the states sharing the remaining $9.7 million. State payments were based on how much was spent on Rebif in each state. The state of New York, for example, will receive $2.5 million from the settlement, while Washington will receive $338,000.

"Those who compromise the integrity of the markets for profit at the expense of taxpayers will be forced to pay," New York Attorney General Eric T. Schneiderman said in a statement. "Taxpayers and, in this case, patients must have absolute confidence that they are receiving health care on the merits [of their needs] and that taxpayers are getting the best deal possible."

The Serono settlement resulted from an investigation by the U.S. Attorney's office for the District of Maryland, with assistance from the U.S. Department of Justice and other federal agencies. Since January 2009, the Justice Department has used the False Claims Act to recover more than $7.3 billion, including approximately $5.7 billion in cases involving federal health care program fraud.

This isn't Serono's first brush with U.S. law. In 2005, Serono paid $704 million to the federal government and the states to settle criminal charges and civil allegations of illegal activity to promote, market and sell its AIDS drug, Serostim, between 1996 and 2004. Under the settlement, Serono paid a $136.9 million criminal fine, while its affiliate companies coughed up $567 million to settle civil accusations.

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