Settlement in prescription drug case will reimburse Medicaid expenses.

Economic Opportunity Report, October, 2005

A settlement in a prescription drug case will be used to reimburse federal and state Medicaid programs that purchased the drug when its manufacturer was under investigation.

Switzerland-based Serono and U.S. subsidiaries that produce the Serostim AIDS weight-control prescription will pay $704 million to settle criminal fraud charges for marketing and selling the drug, the Justice Department said Oct. 17.

"Serono abused the system of testing and approval and put its desire to sell more drugs above the interest of patients," said Attorney General Alberto Gonzales.

The Food and Drug Administration approved Serostim in 1996, but its demand fell as other drugs entered the market. Serono Labs' schemes to beat the competition included conspiring...