Swiss biotechnology company Serono, which put itself up for sale last month, has been formally ordered to pay $704 million dollars to settle claims that it offered kickbacks to doctors in return for prescribing its AIDS wasting treatment Serostim.

The ruling brings to an end a four-year investigation into Serono’s promotional tactics for Serostim (somatropin), and includes a $137 million criminal fine and a further $567 million to settle civil claims. This is the third-largest penalty ever imposed in the USA for healthcare fraud, according to US Attorney General Alberto Gonzales.

The settlement was first tabled in October, and late last week Serono voluntarily entered a guilty plea in the federal investigation of several illegal schemes to promote Serostim for AIDS wasting. The drug was introduced for this indication in 1996

As a result of its criminal conviction, US subsidiary Serono Laboratories will be excluded from all federal healthcare programs for at least five years, although its product range will continue to be eligible for reimbursement.

Serono has conceded that it aggressively promoted Serostim at a times when advances in antiretroviral therapy, and particularly the use of cocktails of drugs, led to a dramatic reduction in the number of HIV patients going on to develop full-blown AIDS, and with it a reduction in cases of wasting. The Swiss company developed a diagnostic test, known as body cell mass, which allowed it to diagnose AIDS wasting even in patients who had not lost any body weight and create a market for its drug.

In addition, Serono pleaded guilty to giving physicians illegal kickbacks – including an all-expenses-paid trip to a medical conference in Cannes, France, in return for prescribing Serostim.

In April 2005, Serono announced that it had taken a $725 million provision to cover the settlement and related costs.