Serono ordered to settle fraud case

Serono boss Ernesto Bertarelli led Switzerland to victory in the 2003 America's Cup Keystone

A United States judge has formally ordered Swiss biotech firm Serono to pay $704 million (SFr908 million) to settle claims that it offered kickbacks to doctors.

This content was published on December 16, 2005 - 09:31

Serono, which is based in Geneva, pleaded guilty in a Boston court to criminal conspiracy charges in relation to its Aids treatment drug Serostim.

The judge's announcement finally brings to a close a four-year investigation by the US authorities.

Serono agreed to pay a criminal fine of $136.9 million and pay an additional $567 million to settle civil claims.

The settlement also bars Serono Laboratories, based in Rockland, Massachusetts, from participating in federal health programmes for five years.

The sentence handed down on Thursday by district judge Reginald Lindsay is the third-largest payment for health-care fraud, said US Attorney General Alberto Gonzales.

In 1996 the Food and Drug Administration approved Serostim for use in treating Aids wasting, an often-fatal condition involving severe weight loss.

Serostim, which contains the human growth hormone Somatropin, came on the market around the same time as protease inhibitor drugs, which sharply curbed the Aids virus when patients used it in combinations, or "cocktails".

Illegal payments

With demand for Serostim declining, Serono Labs made illegal payments to physicians and offered them free trips to a conference in Cannes, France, in exchange for prescribing the drug, prosecutors said.

Serono, whose chief executive Ernesto Bertarelli led Switzerland's Alinghi to success in sailing's America's Cup in 2003, said in April that it had taken a $725 million provision to cover the settlement and related costs.

The company said the provision, which was recorded as an exceptional charge in the first quarter, was sufficient to cover the settlements and related costs that will be paid in 2005.

Serono, the world's third-largest biotech company, announced last month that it had hired investment bank Goldman Sachs to explore strategic alternatives.

Sources told Reuters earlier this month that Goldman is asking for binding bids in a potential $15 billion auction for the company by early next year.

swissinfo with agencies

In brief

Serono Laboratories in Rockland, Massachusetts is the United States subsidiary of Serono, which is based in Geneva.
The company is active mainly in biotechnology, fertility drugs and neurology.
In 2004 Serono generated a turnover of $2.46 billion and posted a net income of $494 million.
It is the world's third-largest biotech concern, with a staff of 4,900.

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