Serono: When the Sales Campaign Reached Into the Diagnosis

Serono agreed to pay $567 million in the Serono Serostim fraud settlement to resolve civil allegations involving prescription incentives, and Serono Laboratories agreed to plead guilty to criminal charges involving unapproved diagnostic software. That plea described a sales effort that reached into the examination itself: company employees administered tests to patients to encourage doctors to prescribe Serostim.

The Department of Justice announced the resolution on October 17, 2005. What distinguishes it among pharmaceutical fraud cases is the connection between a shrinking market, a diagnostic tool named in the guilty plea and a prescription incentive. The company had a drug for AIDS wasting. Its sales campaign sought to expand who appeared to need it.

Why Demand for Serostim Fell

Demand for Serostim fell soon after its launch because another advance in AIDS treatment reduced the condition it was approved to treat. The FDA granted Serostim accelerated approval in 1996 solely for AIDS wasting. Protease inhibitor drugs arrived at the same time, and their use in combination sharply curtailed the progression of AIDS.

The Justice Department’s account describes the commercial consequence: AIDS wasting became less common, and demand for Serostim dropped significantly. The government described how Serono Laboratories then pursued a marketing and sales campaign to redefine AIDS wasting and create a market for the drug. Better treatment had reduced the need. The sales response was to widen the diagnosis.

Public Citizen’s 2010 study, Rapidly Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry: 1991 to 2010, suggested that pressure to maximize sales of existing products could help explain promotion beyond approved uses.

RJL Sciences and the Serostim Diagnostic Software

Serono Laboratories’ guilty plea set out the Serostim diagnostic scheme. It used bioelectrical impedance analysis software to calculate body cell mass and diagnose AIDS wasting. The device had no FDA approval for those uses. Serono Laboratories worked with the device maker RJL Sciences to market the software, and Serono employees directly administered tests to patients to induce prescriptions.

By its own guilty plea, the drug company was involved on both sides of the prescribing decision. It marketed the treatment and helped deliver the test offered as a reason to use that treatment. An employee who saw only the drug’s promotional materials would have seen a different part of the operation from an employee who worked with the software or administered the tests.

This makes the case more specific than a general account of off-label promotion. In the plea’s account, the unapproved use of the diagnostic software helped create the apparent need for the prescription. The commercial sequence ran from the test to the diagnosis to the drug, with public programs facing the resulting claims.

We look at what the company said the test could establish, how its employees used it and how the result entered the prescribing conversation.

The Cannes Trip Was Priced in Prescriptions

In its guilty plea, Serono Laboratories also admitted that the Cannes incentive offered physicians an all-expense-paid trip to a medical conference in France in return for writing up to 30 new Serostim prescriptions. The Justice Department’s account of that plea put the treatment cost at $21,000 per course and the total prescription value at $630,000 per doctor.

In the plea, a medical conference invitation came with a prescription target. That is the core of the pharmaceutical kickback story: a benefit to the person choosing the drug, tied to more business for its manufacturer.

A Later Case Followed the Test Back to the Sales Team

QOL Medical’s Sucraid case shows how diagnostic testing can feed a drug company’s sales operation. In the civil resolution announced in November 2024, QOL admitted distributing free breath-test kits, receiving test results and directing representatives to providers whose patients had positive results. It tracked whether those sales calls converted positive tests into Sucraid prescriptions.

The whistleblowers’ amended complaint alleged what sales representatives were told to do when doctors questioned the test:

The sales team stood between a diagnostic claim and a prescription. In Serostim, according to the guilty plea, employees administered the tests. In Sucraid, the company received the results and tracked prescription conversion. The testing operation and the sales operation need to be understood together.

The Civil Settlement Reached Federal and State Money

The Serostim civil settlement resolved allegations that Serono submitted claims for Serostim that were not eligible for reimbursement because they were for unnecessary or off-label use, or for prescriptions induced by kickbacks. It allocated $305 million to the federal government, for losses to the federal share of Medicaid, the Veterans Administration, the Department of Defense and the Federal Employees Health Benefits program, and nearly $262 million to state Medicaid programs. The Justice Department said Medicaid and each state Medicaid agency that paid for Serostim during the investigation’s period, 1996 through 2004, would recoup all the money paid as a result of Serono’s conduct. Taxpayers bore the cost of the alleged scheme. According to the guilty plea, patients with AIDS were tested by employees of the company selling the drug.

A drug company can cause a false reimbursement claim even when a pharmacy or physician submits the bill.

The five-year corporate integrity agreement covered Serono Holding, Serono’s U.S. subsidiary, and all of its U.S. affiliates.

For an insider, the company names identify who employed the people doing the testing, approved the arrangement and paid for it. We connect the part you saw to the decisions that produced the prescriptions and government claims.

Employees Brought the Serostim Case Forward

A former Serono Laboratories employee’s case began the investigation in 2000, and four other employees filed similar cases. The announced reward for the employee whistleblowers was approximately $51.8 million collectively. Their actions brought the company’s commercial practices into a government payment case.

That is the value of the pharmaceutical insider’s view. A software presentation, a testing assignment or a prescription-linked travel offer can explain why the sales campaign worked as it did. We work with you to connect those internal decisions to the prescriptions and public money they affected, building your strongest pharmaceutical whistleblower case.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When You Know How the Test Sold the Drug

If you saw a diagnostic tool used to drive prescriptions or a conference invitation tied to orders, speak with our whistleblower experts about how the test sold the drug. We build the case with you and bring in pharmaceutical fraud whistleblower lawyers who understand diagnostic marketing, prescriber incentives and government reimbursement. We stay beside you as your knowledge of the sales operation becomes the foundation of your case.