by Ben Vernia | November 23rd, 2016
On November 7, the Department of Justice announced that Biocompatibles had agreed to pay a combined settlement of $36 million to resolve misbranding allegations concerning its blood-vessel device. According to DOJ’s press release:
Pennsylvania-based medical device manufacturer Biocompatibles Inc., a subsidiary of BTG plc, pleaded guilty today to misbranding its embolic device LC Bead and will pay more than $36 million to resolve criminal and civil liability arising out of its illegal conduct, the Justice Department announced today. LC Bead is used to treat liver cancer, among other diseases.
Under the terms of the plea agreement before the U.S. District Court for the District of Columbia, Biocompatibles pleaded guilty to a misdemeanor charge in connection with the company’s misbranding of LC Bead, in violation of the Food, Drug and Cosmetic Act. LC Bead was cleared by the U.S. Food and Drug Administration (FDA) as an embolization device that can be placed in blood vessels to block or reduce blood flow to certain types of tumors and arteriovenous malformations. LC Bead has never been cleared or approved by FDA as a drug-device combination product or for use as a drug-delivery device or “drug-eluting” bead.
As part of the criminal resolution, Biocompatibles will pay an $8.75 million criminal fine for the misbranding of LC Bead and a criminal forfeiture of $2.25 million. The FDA sought assurances in 2004 that Biocompatibles would not use FDA clearance for the device for embolization to market the device for drug delivery, according to a statement of offense to which the company agreed. Biocompatibles told the FDA that “under no circumstance” would the company use the embolization clearance to market the device for drug delivery. However, two years later, Biocompatibles began marketing LC Bead for drug delivery through the company it hired to carry out its sales and distribution in the United States. According to the statement of offense, the distribution company told its sales representatives that LC Bead was “[a] drug-delivery device” and trained its sales representatives 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 and despite the absence at that time of statistically significant evidence to support such claims.
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In addition, Biocompatibles will pay $25 million to resolve civil allegations under the False Claims Act that the company caused false claims to be submitted to government healthcare programs 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 for use as a drug-eluting bead, it constituted a new combination drug-device product that was not approved or cleared by the FDA and not covered by Medicare and other federal health care programs. The federal share of the civil settlement is approximately $23.6 million, and the state Medicaid share of the civil settlement is approximately $1.4 million.
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The government announced that the whistleblower in the case will receive $5.1 million of the federal civil settlement (a 21.6% relator’s share).