Merck Serono pays $44M to settle kickback charge

The Department of Justice said Wednesday that multinational drugmaker Merck Serono SA has agreed to pay $44.3 million to settle allegations that it illegally promoted one of its drugs using kickbacks to doctors.

Federal prosecutors said that Merck Serono and EMD Serono allegedly made inappropriate payments to hundreds of doctors for prescribing its multiple sclerosis drug, Rebif, between 2002 and 2009. Merck Serono paid to send doctors to various training meetings and conferences at upscale resorts and other locations, according to the Department of Justice.

"The health care of our seniors and other vulnerable citizens under the Medicare and Medicaid programs should be based upon sound medical decisions, not upon decisions tainted by influence and corruption," said Tony West, assistant attorney for the Justice Department's civil division.

Federal prosecutors said the kickbacks resulted in "false claims" for the drug being billed to the federal health programs Medicare and Medicaid. The two programs, which cover the elderly and poor, provide prescription drug and health care coverage to nearly 80 million Americans.

The Department of Justice has increasingly used the False Claims Act to target pharmaceutical companies in recent years, reaching multibillion dollar settlements with Pfizer Inc., Eli Lilly & Co. Inc. and other drugmakers.

The company pointed out in a statement: "the settlement contains no claims that unnecessary prescriptions for Rebif were written, no allegations of patient harm and no admission of fault by the company."

An analysis of federal settlements published last year found that health care companies accounted for 84 percent of all false claims fines in fiscal 2010. That was more than any other industry, according to the non-profit consumer advocacy group Public Citizen.

Rebif is Merck Serono's best-selling product with sales of roughly 1.7 billion euros ($2.5 billion) last year.

The settlement payment will be shared between the federal government and various state governments, which will receive a total of $9.7 million.

Merck is already legally bound by a corporate integrity agreement related to an earlier 2005 settlement with the federal government. That agreement has now been extended by three years to 2014, and includes additional accountability requirements for company executives and board members, according to the Department of Health and Human Services' Office of Inspector General.

Merck Serono is a unit of German pharmaceutical and chemical conglomerate, Merck KGaA. The company has no current relationship to the U.S. drugmaker Merck & Co. Inc.