FDA, DoJ Lose in Off-label Case
A Western Texas jury has found Vascular Solutions and its CEO Howard Root not guilty on all federal charges concerning alleged off-label promotions of the Vari-Lase Short Kit. Senior U.S. District judge Royce Lamberth has entered an order dismissing the case that is final and not subject to an appeal. This is a significant loss for the government and FDA because it was hailed as an escalation in enforcement for holding company executives responsible for corporate wrongdoing.
The case stemmed from a 2014 Department of Justice (DoJ) indictment charging Vascular Solutions and Root with selling unapproved medical devices and conspiring to defraud the government by concealing the allegedly illegal sales activity. The government charged Root and the company with one count each of conspiracy and eight counts of introducing adulterated and misbranded medical devices into interstate commerce.
The devices at issue were from Vascular Solution’s Vari-Lase product line, a system designed to treat varicose veins by ablating them with laser energy. The indictment charged that a sales campaign persisted in the face of FDA warnings, a whistleblower complaint to the CEO, and a failed clinical trial that showed the device was less safe and less effective than a product that had already been approved.
Earlier that year, the company agreed to pay $520,000 to resolve allegations that it caused false claims to be submitted to federal healthcare programs by marketing the device without FDA approval and despite the failure of its own clinical trial. Justice said the company marketed and sold its Vari-Lase Short Kit medical device for the ablation of perforator veins, but it was approved only for treating surface or superficial veins in the leg. It alleged that the company did this despite having attempted and failed to get FDA marketing clearance for ablation of that type of vein.
Recently, DoJ developed new guidelines for holding corporate executives accountable for company misdeeds. In a memo to senior DoJ staff and all U.S. Attorneys, deputy attorney general Sally Yates says that “one of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing. Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.”
In response to the not guilty verdict, Root had this to say:
“The company and I are vindicated by today’s verdict, but outraged by the obscene legal process we were forced to endure. We are appalled by the malicious behavior and lack of substantive oversight of the government officials who pursued this matter – in particular Assistant U.S. Attorneys Bud Paulissen and Christina Playton of the Western District of Texas, Consumer Protection Branch Trial Attorneys Timothy Finley and Charles Biro, and FDA Special Agent George Scavdis. There simply is no excuse for abusive and dishonest conduct in any U.S. governmental agency, much less in the Department of Justice and our law enforcement agencies.
“We greatly appreciate the jury’s complete rejection of the government’s false allegations. But to get to this result, we were subjected to five years of attacks which forced us to hire 10 separate law firms at a cost of over $25 million to defend against a criminal prosecution that clearly was never warranted by the facts. This case centered on just one version of just one of our more than 100 medical devices – a version that was FDA-cleared, made up only 0.1% of our sales, and, by the government’s own admission, never harmed a single patient. To say that this prosecution was wrong-headed and disproportionate would be the understatement of the year.
“While this matter is now over for Vascular Solutions and me, an upcoming criminal trial remains scheduled for one of the company’s sales representatives on obstruction of justice charges because he refused to change his grand jury testimony to match what these prosecutors wanted to hear. It should now be obvious that our sales rep’s indictment was merely a malicious retribution by misguided prosecutors, an action that needs to be corrected immediately. And after his indictment is dismissed, if the U.S. Attorney in San Antonio still wants to prosecute someone for obstruction of justice in this case, in my opinion he wouldn’t even have to leave his own office to find the most suitable person to indict.
“Vascular Solutions is fortunate to have had the financial strength and dedicated employees necessary not only to fight, but to win. Most other companies would have been destroyed before they even set foot in the courtroom. In order to ensure that what happened to Vascular Solutions doesn’t happen to a defenseless company or individual, changes need to be made in the personnel and culture at the Department of Justice.
“Every investigation that is being conducted by the prosecutors who were assigned to our case needs to be independently reviewed by the Department of Justice to make sure that their abusive and dishonest tactics are not being used on others. Furthermore, every current investigation of a medical device company concerning ‘off-label’ promotion needs to be reviewed by the Department of Justice to make sure their prosecutors’ theories comply with the law, not just their wishes.”
Additionally, the company has demanded that DoJ correct the “multiple false and misleading public allegations” by issuing a corrective press release.“Gratuitous public allegations are easy for the Department of Justice to make when a lawsuit starts and the accused is unable to respond. But now that the trial is over and the jury has rejected all of the government’s accusations, the Department of Justice needs to set the record straight in the interests of justice,” the company says. “And after that, the Department of Justice needs to investigate what went wrong in our case and make internal changes in order to ensure that its next ‘hand-picked’ and ‘offensive’ criminal prosecution isn’t based on false allegations made by a money-motivated disgruntled former employee, which is what happened here.”