Consumer Fraud

Medical Device Maker Pays $36 Million to Resolve Criminal liability and Whistleblower Allegations

Pills Stethascope on Money 435x289 Medical Device Maker Pays $36 Million to Resolve Criminal liability and Whistleblower AllegationsPennsylvania-based medical device manufacturer Biocompatibles Inc., a unit of BTG plc, pleaded guilty Monday to misbranding its embolic device LC Bead and will pay more than $36 million to resolve criminal and civil liability, the Justice Department announced today.

According to the Justice Department, about $25 million of the settlement will resolve a federal False Claims Act lawsuit filed by Ryan Bliss, a former Biocampatibles marketing director. The remaining $11 million is a criminal fine for illegally promoting its LC Bead device for off-label uses even after it assured the U.S. Food and Drug Administration (FDA) it wouldn’t.

The FDA approved the LC Bead only for the embolization of hypervascular tumors. It is placed in blood vessels to block or reduce the flow of blow to certain types of tumors and arteriovenous malformations.

According to the Justice Department, the FDA sought assurances in 2004 that Biocompatibles would not use its FDA clearance for the LC Bead to market it as a drug-delivery device. Biocompatibles told the FDA that “under no circumstance” would the company use the embolization clearance to market the device for drug delivery.

Two years later, however, Biocompatibles, a British company, began marketing the LC Bead for drug delivery through the company it contracted to carry out sales and distribution of the device in the United States. According to court documents, the distribution company told its sales representatives that the LC Bead was “a drug-delivery device” and trained them to “aggressively penetrate the chemoembolization market.”

Sales representatives subsequently told health care providers that the device increased the level of chemotherapy delivered to a liver tumor and resulted in “better tumor response rates,” despite the lack of FDA clearance or approval for that use.

The civil part of the settlement resolves allegations that the company caused the submission of false claims to Medicare and Medicaid for procedures in which LC Bead was loaded with chemotherapy drugs and used as a drug-delivery device.

When LC Bead was combined with prescription drugs to use as a drug-delivery device, it constituted a new combination drug-device product that was not approved or cleared by the FDA and thus not covered by Medicare and other federal health care programs.

“The FDA approval process serves an important role in ensuring that federal health care participants receive devices that are safe, effective and medically appropriate,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will not permit companies to circumvent that process and put profits over patient safety.”

Mr. Bliss will receive $5.1 million (about 14 percent) of the civil settlement as a whistleblower award for exposing the alleged fraud to the U.S. government.

Source: U.S. Department of Justice