Another FDA Prosecution Partially Fails in Acclarent Case
The former chief executive officer and vice president of sales at medical device company Acclarent have been acquitted by a Boston jury involving felony charges that the two illegally marketed a medical device for off-label uses. While cleared of the felony charges, the jury did find the two guilty of less serious misdemeanor charges of introducing adulterated or misbranded medical devices into interstate commerce. Not securing a felony conviction is the latest defeat for FDA and the government under a directive to prosecute corporate executives accused of wrongdoing.
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.
Last month, the government suffered another setback (see story) on its get-tough crackdown on FDA-regulated company executives in fraud cases when a jury in Boston acquitted former Warner Chilcott president W. Carl Reichel of conspiring to pay kickbacks to physicians. The case stemmed from an earlier government investigation that led to the company agreeing last October (see story) to plead guilty to a felony charge of health care fraud and pay $125 million to resolve its criminal and civil liability arising from the illegal marketing of the drugs Actonel, Asacol, Atelvia, Doryx, Enablex, Estrace and Loestrin. According to the Justice Department, the company “committed a felony violation by paying kickbacks to physicians throughout the U.S. to induce them to prescribe its drugs, manipulating prior authorizations to induce insurance companies to pay for prescriptions of Atelvia that the insurers may not have otherwise paid for and making unsubstantiated marketing claims for the drug Actonel.”
And in February, a federal grand jury in San Antonio, TX acquitted Minneapolis-based Vascular Solutions CEO Howard Root (see story) of all felony charges brought against him in an off-label sales and conspiracy to defraud indictment. Root accused FDA’s U.S. Department of Justice prosecutors of behaving like Mafia enforcers in their tactics, a complaint echoed on CNN’s Global Public Square program 7/17 by former Canadian media mogul Conrad Black, who described the American criminal justice system, especially its prosecutors, as “an evil, rotten system ... a cancer in that country [that] ... is going to destroy the country if you don’t do something about it.”