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Missouri secures its largest-ever Medicaid fraud settlement

October 19, 2005
By: Leslie Yingling
State Capital Bureau

JEFFERSON CITY -

Missouri has secured its largest-ever Medicaid fraud settlement with a company that illegally marketed the AIDS drug Serostim.

The state will recover $21 million from a $567 million multi-state settlement with Serono Laboratories. The company also plead guilty Monday to federal conspiracy charges for illegally marketing Serostim by creating an unreliable diagnostic test and paying off cooperative doctors with free vacations.

The cost of many Serostim prescriptions was paid by Medicaid, the joint federal-state health program. Reimbursement for Serostim prescriptions cost Medicaid about $6,000 per month, state Attorney General Jay Nixon said.

Missouri, Florida, Maryland, Massachusetts, and New York led negotiations with Serono, which will pay $704 million in criminal fines and civil penalties, the Justice Department announced Monday.

The aggreement is the third largest health care fraud settlement secured by the federal government.

More than $7 million of Missouri's share will reimburse the state's Medicaid program, attorney general spokesman Scott Holste said. "It will go straight back to Medicaid, to where the losses were incurred," he said.

The rest will compensate the federal government for its portion of the Serostim prescription costs.

Holste said the money is a near-exact match for what Missouri's Medicaid program paid out for all Serostim prescriptions. The state stands to gain a little, he said, because the amount includes the cost of legitimate Serostin prescriptions.

Serostim was approved by the Federal Drug Administration in 1996 to treat AIDS wasting syndrome, a deadly condition involving profound weight loss. At about the same time, the development of AIDS cocktails -- combinations of drugs -- made patients less prone to the condition. Serono reacted to the decreased demand for Serostim by looking for new ways to market the drug.

Nixon said the company tested patients for AIDS wasting in ways that overdiagnosed the condition, and offered financial incentives -- free trips to the south of France -- to doctors who agreed to write 30 prescriptions for Serostim. No doctors have been charged.

Forty-three states will recover Serostim reimbursement money from the settlement.

Holste said the Missouri is always on the lookout for drug price and marketing fraud.

"Missouri Medicaid lays out millions of dollars every year for prescription drugs, and those who manipulate that system cost taxpayers," he said.

"This was a way of cracking down on waste, fraud and abuse in Missouri Medicaid."