US Exposes AIDS-Drug Fraud

October 18, 2005

The Serono Corporation also conspired to introduce a new test for

AIDS wasting, despite not having FDA approval. The test diagnosed

AIDS wasting even in the absence of weight loss, Sullivan said.

He estimated that 85 percent of Serostim prescriptions were

unnecessary.

http://www.billingsgazette.com/index.php?

id=1&display=rednews/2005/10/18/build/business/40-drug-fraud.inc

AIDS drug maker to pay for wrongs

Eric Johnston, PlanetOut Network

Tuesday, October 18, 2005 / 04:32 PM

"A doctor who testified before a grand jury in the case talked with

the PlanetOut Network on condition of anonymity. He said, at the

time, some doctors diagnosed AIDS wasting, not realizing patients

were actually suffering from lipodystrophy, a non life-threatening

condition thought to be caused by AIDS drugs that results in fat

redistribution. Symptoms of lipodystrophy include sunken cheeks or

loss of fat in the arms, legs and buttocks."

Second Lot of Counterfeit Serostim Surfaces, Serano Warns Customers

A lot of drugs labeled as Serano's AIDS-wasting medication Serostim

(somatropin, rDNA origin), bearing the lot number MNH605A, is

counterfeit, the Norwell, Mass.-based Serano said. The company has

sent notice to wholesale distributors, pharmacies, physicians and

AIDS service groups telling them to immediately return any product

labeled with that lot number. An investigation by the Food and Drug

Administration has so far revealed that the fake product contains

a "small amount" of human growth hormone -- but not the recombinant

human growth hormone used in Serostim -- and "significantly less"

growth hormone than the genuine product, said Serano spokesperson

Carolyn Castel. (Reuters (05.18.01))

Swiss drug maker Serono, one of the world's largest pharmaceutical

companies, agreed Monday to pay $704 million and plead guilty to

illegally promoting Serostim, a high-priced drug used to treat AIDS

wasting syndrome.

The settlement came after a four-year investigation by the U.S.

attorney's office in Massachusetts, which was tipped off by

employees at the company's U.S. division near Boston.

"We are pleased to put the matter behind us," said Serono USA

general counsel Thomas Gunning in a press release on the company's

Web site. "Serono takes compliance issues very seriously and has a

rigorous compliance program to ensure that its employees meet the

highest ethical standards."

Serostim, which contains human growth hormone, was approved by the

Food and Drug Administration in 1996 for treating AIDS wasting

syndrome, a condition characterized by a 10 percent or more loss in

lean body mass over a short period of time for an unexplained

reason. The cost for the drug was very high, $21,000 for 12 weeks of

treatment, which was often paid for by government insurance plans

such as Medicaid.

Around that same time, protease inhibitor drugs came on the market,

leading to so-called "cocktail" multi-drug therapy that helped lower

the amount of AIDS virus in patients, making them less prone to AIDS

wasting.

Suddenly, the demand for Serostim was greatly diminished, so

officials at Serono's U.S. operations hatched a plan to offer

kickbacks to doctors for prescribing it, including free trips to the

south of France, the Justice Department said in court papers.

"Serono put its desire to sell more Serostim above the interests of

patients and the public," said Attorney General Alberto Gonzales.

A doctor who testified before a grand jury in the case talked with

the PlanetOut Network on condition of anonymity. He said, at the

time, some doctors diagnosed AIDS wasting, not realizing patients

were actually suffering from lipodystrophy, a non life-threatening

condition thought to be caused by AIDS drugs that results in fat

redistribution. Symptoms of lipodystrophy include sunken cheeks or

loss of fat in the arms, legs and buttocks.

Serostim remains on the market, and experts say it does not appear

to pose a medical risk to the handful of patients who still need it.

"Honestly other than the fraudulent impropriety, there is no known

medical risk that any patients were exposed to," said Dr. Frenk

Guni, a consultant for the National Association of People with AIDS.

"Clearly the drug has become more and more irrelevant with the

availability of HAART (highly active antiretroviral therapy) and

better understanding of the role that nutrients play in balancing

medical potency, as well natural defense and fighting capability on

HIV itself," he said. "It's fair to say it still works as a

regenerative immunological drug where there is degenerative disease

(cachezia), even though these are extreme cases."

Five former Serono executives also have been indicted, according to

Michael Sullivan, the U.S. attorney in Boston who led the

investigation.

As part of the plea, the company's Serono Labs division will be

barred from federal health programs for five years, and the company

has also agreed to government monitoring and audits.

http://www.planetout.com/news/article.html?2005/10/18/3

Firm admits AIDS-drug fraud

Associated Press

WASHINGTON - The Swiss manufacturer of the AIDS treatment drug

Serostim agreed Monday to pay $704 million and plead guilty to

scheming to boost sagging sales by, among other things, offering

kickbacks to doctors to write prescriptions.

As part of the plea, Serono Laboratories will be barred from

participating in federal health programs for five years and will pay

a criminal fine of $136.9 million and civil penalties of $567

million.

The amount is the third largest payment for health care fraud,

Attorney General Alberto Gonzales said in announcing the plea

agreement. "Serono put its desire to sell more Serostim above the

interests of patients and the public," Gonzales said at a news

conference at the Justice Department.

Thomas G. Gunning, Serono's vice president and general counsel in

the United States, said, "This settlement concludes a four-year

government investigation into commercial practices related to

Serostim, and we are pleased to put the matter behind us. The

activities described in the settlement were confined to one unit in

our U.S. operations and cover a brief period in our history." The

company's U.S. headquarters is in Rockland, Mass., a half-hour south

of Boston.

Serostim, which contains the human growth hormone Somatropin, was

approved by the Food and Drug Administration in 1996 to treat AIDS

wasting, an often-fatal condition involving severe weight loss.

At about the time the FDA approved the drug, protease inhibitor

drugs came on the market. Those drugs, when used in combinations

or "cocktails," sharply curtailed the AIDS virus in patients, making

them less prone to AIDS wasting.

Serono offered doctors free trips to the south of France in return

for agreeing to write up to 30 new prescriptions for Serostim, which

cost $21,000 for a 12-week treatment regimen, said Michael Sullivan,

the U.S. Attorney in Boston.

The company also conspired to introduce a new test for AIDS wasting,

despite not having FDA approval. The test diagnosed AIDS wasting

even in the absence of weight loss, Sullivan said.

He estimated that 85 percent of Serostim prescriptions were

unnecessary.

Five former Serono executives also have been indicted, he said.

Geneva-based Serono has eight biotechnology products on the market

in the fields of reproductive health, neurology, dermatology and

treatment of HIV-associated wasting and growth deficiencies.

The company earned $494 million on sales of $2.46 billion in 2004.

Shares of its stock fell 1.2 percent to 833 Swiss francs ($649) in

trading Monday on the Zurich exchange.

The federal investigation grew out of whistle-blower lawsuits filed

by U.S. employees of Serono. Four people will split $51 million as

their share of the settlement, which is allowed under the federal

False Claims Act, Sullivan said.

Monday's settlement is the latest in a series of whistle-blower

claims that have resulted in more than $3 billion in payments from

drug companies in recent years.

Last month, GlaxoSmithKline PLC said it will pay $150 million to

settle claims it overcharged the government for two anti-nausea

drugs.

Federal and state officials are looking into 150 price and marketing

fraud cases involving more than 500 drugs, according to Peter

Keisler, assistant attorney general in charge of the Justice

Department's Civil Division.