Biotechnology company Serono announced last week in an earnings release that it plans to set aside $725 million to settle investigations into sales and pricing practices of its growth hormone Serostim, which can be used to help treat AIDS-related wasting, The Wall Street Journal reports. The federal government has been investigating the company since 2001, and similar state-level investigations are under way in California, Florida, Maryland, and New York. Four former company sales executives were charged this month for allegedly offering kickbacks, including free trips to an HIV conference in France, to doctors who increased the number of prescriptions they wrote for the drug. A former regional sales manager in December pleaded guilty to bribing doctors to write Serostim prescriptions. Former company employees have said they were pushed by top Serono staff members to encourage doctors to increase Serostim prescriptions to meet a six-day, $6 million sales goal.
The criminal and civil investigations currently under way are aimed at discovering whether Serono violated federal and state false claims and antikickback laws. In the earnings release, Serono labeled the $725 million set aside to settle the cases as a "one-time exceptional charge." The payment caused the company to post a first-quarter loss of $568 million. Although a formal deal hasn't been worked out with the federal government to settle the investigation, a release by the company says talks with prosecutors have "advanced to a point where it is not appropriate to take a provision that management believes will be sufficient to cover resolution of the investigation related to Serostim," the Journal reports. The amount set aside by Serono also should cover the state-level investigations, analysts say.