Serostim continues to haunt Serono
Swiss biotechnology firm Serono has confirmed that it faces a class action suit in the United States after admitting to illegally promoting its Aids drug Serostim.
A Boston court formally ordered Serono late last year to pay $704 million (SFr922 million) to settle claims that it offered kickbacks to doctors to push its weight-wasting treatment.
The new suit, filed in Massachusetts, was reported in the SonntagsZeitung newspaper on Sunday.
“The newspaper refers to the case as is it stated (in our report to the US Securities and Exchange Commission). I cannot comment further,” said spokeswoman Benedicte Bogh.
In its SEC filing last month, Serono said the action brought by health insurer the Government Employees Hospital Association, could have an “adverse effect on the operations or financial condition of the company.”
“The company cannot predict the timing of the resolution of this matter or ultimate outcome,” it added.
Serono agreed late last year to pay millions of dollars in fines and civil charges after pleading guilty to knowingly causing the submission of false claims for Serostim that were not eligible for reimbursement under government health programs.
Serono, the world’s number three biotechnology company, is best known for its multiple sclerosis drug Rebif and is a leader in infertility treatment.
Fraudulent marketing
The suit, filed by law firm Hagens Berman Sobol, claims that Serono illegally inflated the published average wholesale price of their drugs in order to gain market share and increase profits.
The plaintiffs allege that “from 1999 through the present, Serono created and implemented a fraudulent marketing and sales scheme to substantially increase the sales of certain drugs and reap unlawful profits at the expense of Medicare patients, healthcare insurers, consumers and others”.
The suit goes on to state that these practices included providing free samples and instructions to bill for them, giving financial assistance to doctors as well as providing other financial inducements and hidden discounts.
The fine handed down to Serono by a US district court last December was the third biggest ever for healthcare fraud. The company pleaded guilty to criminal conspiracy charges, bringing to a close a four-year investigation by the US authorities.
The settlement also barred Serono Laboratories, based in Rockland, Massachusetts, from participating in federal health programmes for five years.
The fine was big enough to plunge Serono into the red with a $106 million loss last year despite increased turnover.
No buyer
The lawsuit comes as the company seeks a buyer. Serono has been on the shelf since last November, and both Swiss drug maker Novartis and Britain’s GlaxoSmithKline have passed on making an offer.
A suggested sale price of $15 billion failed to attract any bidders, and Glaxo is reported to have considered even $12 billion as too rich for its taste.
The uncertainty surrounding Serono has affected staff according to Swiss media reports this week. Employees are jumping ship and the company has allegedly put retention bonuses in place to keep workers motivated.
But Fiat boss Sergi Marchionne, a Serono board member, told the Le Temps newspaper on Saturday that doubts over the future of the company should be resolved soon.
“I can tell you […] that the uncertainties over this wait will dissipate pretty soon,” he said.
Marchionne added that the time allotted to finding a buyer would be soon over and that pursuing this option over a longer period would not help the company.
swissinfo with agencies
Based in Geneva, Serono is the world’s third-largest biotech concern, with 4,900 employees and operates in 44 countries, with production facilities in eight countries and sales in over 90 countries.
The company has products in four therapeutic areas: reproductive health, multiple sclerosis, growth and metabolism (treatments for HIV-associated wasting and growth deficiencies) and dermatology.
Chief executive Ernesto Bertarelli leads the management team of Alinghi, Switzerland’s victorious yacht in the last America’s Cup.
Financial figures 2005
Turnover: $2.585 billion (+5.2%)
Research and development expenses were flat at $593.6 million)
Pre-tax profit/loss : – $72.4 million (+$574.2 million in 2004)
Net profit/loss: -$106.1 (+$479.7 million)
In compliance with the JTI standards
More: SWI swissinfo.ch certified by the Journalism Trust Initiative
You can find an overview of ongoing debates with our journalists here . Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.