The Justice Department announced the third-largest healthcare fraud recovery by the U.S. ever -- a $704 million settlement by Swiss drugmaker Serono to resolve criminal and civil charges. Serono pleaded guilty to two criminal charges that it paid kickbacks to physicians and engaged in an illegal conspiracy to boost sales of a drug to combat AIDS-related weight loss. Serono was barred from participating in federal healthcare programs for five years and its U.S. subsidiary, based in Norwell, Mass., signed a five-year corporate integrity agreement. The settlement includes $136.9 million in criminal fines, $262 million in civil False Claims Act recoveries for state Medicaid programs and $305 million in civil recoveries for federal healthcare programs. In a news release, Serono General Counsel Thomas Gunning said, "The activities described in the settlement were confined to one unit in our U.S. operations and cover a brief period in our history. Serono takes compliance issues very seriously and has a rigorous compliance program."
From 1996 to 2004, Serono conspired with RJL Sciences to market a software package not yet approved by the Food and Drug Administration for diagnosing AIDS-related weight loss. RJL and its president pleaded guilty to related charges earlier this year. Serono also pleaded guilty earlier this year to giving physicians all-expense-paid trips for prescribing the antiwasting drug. Four current and former company officials have been indicted. The largest healthcare fraud settlements were $884 million by TAP Pharmaceutical Products in 2001 and $1.7 billion by HCA in two related settlements in 2000 and 2002 . -- by Mark Taylor