Acclarent Agrees to pay $18 Million in Off-label Device Settlement
Johnson & Johnson subsidiary Acclarent has agreed to pay $18 million to settle a federal whistleblower false claims lawsuit alleging that the company marketed a sinus device for a drug delivery use not approved by FDA, and causing healthcare providers to submit false claims to Medicare and other healthcare programs. The settlement comes two days after a federal jury in Boston acquitted two former Acclarent executives on felony charges, but they were found guilty of misdemeanor charges of introducing adulterated or misbranded medical devices into interstate commerce (see earlier story).
Former Acclarent executives William Facteau and Patrick Fabian were indicted on 10 counts of introducing adulterated or misbranded medical devices into interstate commerce, one count of conspiracy, three counts of securities fraud, and four counts of wire fraud. The government alleged that the two engaged in a scheme to fraudulently drive up Acclarent revenues and stock valuation by illegally marketing a medical device known as the Relieva Stratus Microflow Spacer for uses not cleared or approved by FDA.
“Despite the fact that the company had told the FDA that the Stratus was a medical device intended to maintain an opening to a patient’s sinus, Facteau and Fabian launched the product intending it to be used as a steroid delivery device,” the government contended. The indictment alleged, however, that FDA had specifically refused Acclarent’s request to clear the Stratus for marketing as a drug delivery device without further submissions to support the use.
Facteau and Fabian are alleged to have concealed Acclarent’s illegal promotion and distribution from potential purchasers of the company. In 2010, Ethicon purchased Acclarent for $785 million, and Facteau and Fabian received $30 million and $4 million, respectively from the transaction.