AG Rowe Announces Multi-State Settlement Against Pharmaceutical Company Serono Inc.

December 23, 2005

Attorney General Steve Rowe announced today that the State Medicaid Program ("MaineCare") has received a check for $207,334.29 as part of a final settlement in a multi-state action against the pharmaceutical company Serono Inc, a Swiss corporation with offices in Rockland, Massachusetts. Maine joined with 41 states and the District of Columbia in charging that Serono had promoted the drug Serostim for the treatment of HIV-wasting, an AIDS related syndrome, when the drug had not been approved by the FDA for that purpose. The States also alleged that Serono had induced physicians to prescribe Serostim for HIV-wasting by offering the physicians benefits such as trips to France. The settlement includes restitution and penalties, and will reimburse the State for claims paid to Serono for dispensing Serostim for the unauthorized treatment between 1997 and 2004.

"Serono abused its position of trust by using an unproven drug on people suffering with HIV to obtain funds from Medicaid and Medicare," said Rowe. "Our Healthcare Crimes Unit will work with other States in bringing enforcement actions against pharmaceutical companies which defraud the Medicaid programs."

This state settlement was reached as part of a federal civil and criminal settlement negotiated by the United States Attorney's Office in Boston. Under the federal agreement, Serono Laboratories, Inc., a U.S. affiliate of Serono S.A., pled guilty to charges of conspiring to defraud the United States and kickback charges. As a result of its criminal conviction, Serono Laboratories will be excluded from participation in all healthcare programs for at least five years. Serostim will remain eligible for reimbursement by state Medicaid programs.

Finally, as part of the settlement, all U.S. affiliates of Serono have entered into a Corporate Integrity Agreement ("CIA") with the United States Department of Health and Human Services Office of Inspector General.