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Attorney General Peter Kilmartin Announces Settlement Agreement with Pharmaceutical Company EMD Serono, Inc

Attorney General Peter F. Kilmartin joined the federal government and other state attorneys general in announcing a settlement with pharmaceutical manufacturer EMD Serono, Inc. (Serono), a Rockland, MA company, to settle 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.

Rebif is an interferon beta-1a drug injected subcutaneously to treat relapsing forms of multiple sclerosis (MS), 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 approximately $19.4 million of the total settlement. The portion of the total settlement for all federal programs other than Medicaid (Medicare Part D, TRICARE, VA and OPM) is $24.9 million. Rhode Island will receive $42,658.26 in state and federal funds (state funds total $23,413). Medicaid is funded jointly by the federal and state governments. The distribution of settlement funds is based on the amount of utilization and the number of Rhode Island doctors that were paid by Serono.

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.

The evidence showed direct payments by Serono to over one thousand 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, Federal Employees Health Benefits Program, and Department of Veterans Affairs.

“When big drug companies engage in deceptive practices in order to line their pockets, we all pay,” said Attorney General Peter Kilmartin. “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 healthcare to those who cannot afford it.”

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 United States District Court for the District of Maryland.

Serono was the subject of a prior investigation and settlement. In 2005, Sereno was investigated for allegations of kickbacks and off-label marketing in connection with Serostim AIDS wasting drug, during the period of 1997 through 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 (“CIA”) with OIG-HHS. 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. Serono is headquartered in Rockland, MA.

The Attorney General’s Medicaid Fraud Control and Patient Abuse Unit enforces the laws pertaining to fraud in the federal/state Medicaid program and prosecutes cases of abuse, neglect or mistreatment of patients in all state healthcare facilities. The Unit prosecutes criminal activity, pursues civil remedies where appropriate and participates with federal and state authorities in a variety of inter-agency investigations and administrative proceedings.

Since January, 2011, the Attorney General has recovered more than $948,000 on behalf of Rhode Island’s Medicaid program.

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