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Merck affiliate to pay $44M to settle false claims charges

EMD Serono, an affiliate of German drug maker Merck, has agreed to pay $44.3 million to settle a lawsuit alleging false claims submissions to Medicare and Medicaid for the multiple sclerosis drug Rebif.

The settlement, announced Tuesday by the U.S. Attorney's office in Maryland, contended that Medicare and Medicaid claims for Rebif were tainted due to compensation allegedly paid out by EMD Serono to doctors to prescribe Rebif between Jan. 1, 2002 and Dec. 31, 2009.

[See also: Pharmaceutical giant to pay $520M to settle false marketing allegations; Novartis to pay $422M fine for marketing violations]

"Healthcare decisions must be based solely upon what is best for the individual patient and not on which pharmaceutical company is paying the doctor the biggest kickback," said Rod J. Rosenstein, U.S. Attorney for the District of Maryland. "All consumers have the right to know that their healthcare provider's judgment about medications they should take has not been undermined by kickbacks from pharmaceutical manufacturers."

The payments, according to the government lawsuit, took many forms, ranging from promotional speaking engagements to sponsorships and charitable contributions.

As part of the settlement, EMD Serono did not admit to any improper conduct.

"It is important to note that 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," said Thomas Gunning, senior vice president and general counsel for EMD Serono, in a statement. "EMD Serono is committed to operating its business with the highest legal, compliance and ethical standards. When questions arise, we discuss them openly with the government and resolve them in a way that is satisfactory to both the company and the government."

Under terms of the settlement, the federal government will receive $34.6 million and several states will receive $9.7 million to settle their respective claims under Medicaid.

"In settling this second case with Serono, OIG extended Serono's existing corporate integrity agreement by three years and required enhanced provisions such as specifically requiring that company directors and senior executives take responsibility for ensuring and monitoring compliance with federal law," said Daniel R. Levinson, Inspector General for the Department of Health and Human Services. "If we can alter the cost-benefit calculus of some directors and executives, OIG can influence corporate behavior without putting access to government healthcare benefits at risk."

The settlement resolves a lawsuit brought by a whistleblower, Tim Amato, in 2005 under the qui tam or whistleblower provisions of the False Claims Act, which permits private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Under the civil settlement, Amato will receive $5.19 million out of the federal share of the recovery.