AGs, feds settle pharmaceutical suit

Jessica M. Karmasek May 5, 2011, 9:42am


PROVIDENCE, R.I. (Legal Newsline) - Rhode Island Attorney General Peter Kilmartin, along with the federal government and other state attorneys general, announced on Wednesday a $44.3 million settlement agreement with pharmaceutical manufacturer EMD Serono Inc.

Serono, a Rockland, Mass., company, settled allegations that the company filed false or fraudulent claims for its drug Rebif to be submitted to the Medicaid program.

Under the terms of the settlement, Serono agreed to pay the federal government and states $44.3 million, plus interest. Rhode Island, Kilmartin's office said, will receive $42,658.26 from the settlement.

Rebif is an interferon beta-1a drug injected subcutaneously to treat relapsing forms of multiple sclerosis, a chronic autoimmune disease that attacks the central nervous system, in order to reduce the number of flare-ups and slow down the development of physical disability associated with MS.

State Medicaid programs will receive about $19.4 million of the total settlement. The portion of the total settlement for all federal programs other than Medicaid is $24.9 million.

Kilmartin said the distribution of settlement funds is based on the amount of utilization and the number of Rhode Island doctors that were paid by Serono.

"When big drug companies engage in deceptive practices in order to line their pockets, we all pay," Kilmartin said in a statement. "I am committed to holding drug manufacturers accountable for their actions and protecting Rhode Island's Medicaid program.

"In this economic climate, it is more critical than ever to ensure that each taxpayer dollar is not being wasted or diverted away from the mission to provide quality health care to those who cannot afford it."

The government investigation focused on direct payments from Serono to health care professionals and indirect payments by Serono to third-party vendors and non-profit organizations that made payments to health care professionals.

According to Kilmartin's office, the evidence showed direct payments by Serono to more than 1,000 health care professionals for attending speaker training, advisory and consultant meetings -- many held at lavish resorts and upscale urban locations.

Even though there was no evidence of quid pro quo, the government contends that Serono made payments to health care professionals to induce those health care professionals to prescribe Rebif, and that the resulting prescriptions were paid for or reimbursed by Medicaid, Medicare, TRICARE, the Federal Employees Health Benefits Program, and the Department of Veterans Affairs.

The investigation was initiated by a lawsuit filed under the qui tam provisions of the Federal False Claims Act. The action was pending in the U.S. District Court for the District of Maryland.

This isn't the first time Serono has been under investigation.

In 2005, the company was investigated for allegations of kickbacks and off-label marketing in connection with Serostim AIDS wasting drug from 1997 to 2004. In that matter, Serono Laboratories pled to criminal violations. Serono Laboratories and Serono Inc. entered into civil settlement agreements with the United States and states, and entered into a Corporate Integrity Agreement with the Office of Inspector General.

Some conduct that is the subject of the current investigation occurred while Serono knew it was under investigation for kickbacks and off-label marketing involving Serostim and while the CIA was in effect, Kilmartin's office said.

From Legal Newsline: Reach Jessica Karmasek by e-mail at

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