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Press Release

Pharmaceutical Giant, Serono, Agrees to Pay $44.3 Million to Settle False Claims Act Case

For Immediate Release
Office of Public Affairs

WASHINGTON - P harmaceutical manufacturers Serono Laboratories Inc., EMD Serono Inc., Merck Serono S.A, and Ares Trading S.A. have agreed to pay $44.3 million to resolve False Claims Act allegations in connection with the marketing of the drug Rebif, the Justice Department announced.


The settlement resolves allegations that Serono paid health care providers from the launch of Rebif in about January 2002 through December 2009, to induce them to promote or prescribe Rebif, a recombinant interferon injectable that is used to treat relapsing forms of multiple sclerosis. Serono is alleged to have made payments to providers for hundreds of speaker training meetings and programs, as well as payments for attending consultant, marketing and advisory board meetings, all at upscale resorts and other locations. Serono’s actions allegedly resulted in the submission of false claims to federal health care programs including Medicare and Medicaid for the payment of Rebif, i.e., 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,” said Tony West, Assistant Attorney General of the Civil Division. “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.”


“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,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland. “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.”


“In settling this second case with Serono, the Office of the Inspector General extended Serono’s existing corporate integrity agreement by three years, and required enhanced provisions such as specifically requiring that company directors and senior executives take responsibility for ensuring and monitoring compliance with federal law,” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services (HHS-OIG).  “If we can alter the cost-benefit calculus of some directors and executives, OIG can influence corporate behavior without putting access to government health care benefits at risk.”


Under the agreement announced today, the proceeds from the settlement will be split between the federal government and various states, with the United States receiving $34.6 million to resolve the federal claims and the states receiving $9.7 million to settle their respective claims under Medicaid.


The settlement is part of the government's emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT), which was announced by Attorney General Eric Holder and HHS Secretary Kathleen Sebelius in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $5.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 have topped $7.3 billion.


The settlement was the result of an investigation by the U.S. Attorney’s Office for the District of Maryland with assistance from HHS-OIG; the Department of Defense Criminal Investigative Service; and the Civil Division of the U.S. Department of Justice. 

Updated September 15, 2014

Press Release Number: 11-565