A subsidiary of Johnson & Johnson has agreed to pay $18 million to settle a whistleblower lawsuit which alleged that the company engaged in illegal marketing for a drug delivery system, promoting uses that were never approved by the FDA.
The Department of Justice (DOJ) announced the settlement agreement on July 22, indicating that Acclarent Inc. has agreed to resolve allegations of falsely and illegally marketing the Relieva Stratus MicroFlow Spacer (Stratus) as a drug delivery system.
The claim involved charges brought against the California-based medical device company for allegedly marketing the Stratus devices as a drug delivery device without FDA approval, even after being previously rejected by the FDA in 2007 to expand the approved uses. Federal officials claimed the deceptive marketing of the devices resulted in healthcare providers submitting false claims to Medicare and other federal healthcare programs for the unapproved use of the Stratus device.
Acclarent’s Relieva Stratus MicroFlow Spacer was approved by the FDA in 2006, for use as a spacer and only to be used with saline to maintain sinus openings following certain surgeries. However, Acclarent petitioned to the FDA in 2007 to expand the approved uses to include drug delivery purposes for prescription corticosteroids, but the petition was denied after the device failed to meet FDA standards.
The DOJ and the FDA joined a whistleblower lawsuit filed under the False Claims Act against Acclarent this year in U.S. District Court for the District of Massachusetts after discovering the manufacturer had been marketing the device for drug delivery uses despite the FDA’s rejection.
According to the lawsuit, as part of Acclarent’s marketing and sales pitch, employees from the company actually trained physicians with a tutorial video that demonstrated the Stratus device being used to deliver a white, milky substance, resembling prescription corticosteroid Kenalog-40. Acclarent was also accused of lying to healthcare providers in telling them during sales meeting that the Stratus device was specifically designed and engineered for delivery purposes.
By May 2013, Acclarent voluntarily discontinued all sales of the Stratus device and withdrew all approved FDA clearances, making the devices no longer available for sale in the United States.
The $18 million settlement agreement brings an end to Acclarent’s civil trial with federal officials. However, Acclarent’s former Chief Executive Officer, William Facteau, and former Vice President of Sales, Patrick Fabian, were convicted of 10 misdemeanor counts of introducing adulterated and misbranded medical devices into interstate commerce after a six-week trial.
“The FDA plays a fundamental role in ensuring the safety and efficacy of medical devices and drugs in this country,” U.S. Attorney Carmen M. Ortiz said in the DOJ press release. “Every time that patients receive a medical device or fill a prescription they should be able to take for granted that the FDA’s requirements have been met. We will vigorously pursue those who ignore or seek to circumvent these important patient protections.”
Melayna Lokosky, the person who brought the case to the government’s attention, will receive about $3.5 million of the settlement under the qui tam provisions of the False Claims Act.