Stryker Biotech, former president, sales managers charged in federal beef

October 28, 2009 by MassDevice staff

Stryker Biotech, its former president and three current sales managers were slapped with federal charges of promoting the off-label use of a pair of bone-growth products and lying to the Food & Drug Administration.

The Hopkinton, Mass.-based firm and its former president, Mark Philip, along with sales managers David Ard, Jeff Whitaker and William Heppner, were indicted by a grand jury on charges of wire fraud and conspiracy. Stryker and Philip were also charged with making false statements to the FDA.

The indictment alleges that the defendants were part of a scheme to promote the combined use of a pair of separate bone-healing products, each granted a narrow, provisional "humanitarian device exemption" by the FDA.

Combining the treatments and devices — the OP-1 Implant, OP-1 Putty and the bone void filler Calstrux — caused adverse effects in patients ranging from minor irritations to infections requiring follow-up surgeries.

The Indictment also charges that Stryker and Philip lied to the FDA about the number of patients treated each year with OP-1 Putty.

In a prepared statement, Stryker said it is "disappointed" about the indictment and "still hopes to be able to reach a fair and just resolution of this matter."

"Conviction of these charges could result in significant monetary fines and Stryker Biotech's exclusion from participating in federal and state health care programs, which could have a material affect on Stryker Biotech's business," according to the statement. "As a matter of company policy Stryker will not have any further comment on these allegations."

The case began last November, when former Stryker sales rep Darnell Martin (PDF) pleaded guilty to the off-label promotion scheme and to faking clinical trial approval paperwork.

Martin said he learned that Stryker had fired another, unnamed sales manager after it discovered falsification of the same type of approval paperwork, prompting him to send emails to the Hopkinton subsidiary in an attempt to cover his tracks.

The company motivated its sales force with bonuses for meeting quotas for clinical trial approvals, according to Martin's plea agreement.

In February, a second former rep, Justin Demming (PDF), admitted to participating in the off-label scheme.

A third rep, Shane Doyle, pleaded guilty in April to a single felony misbranding count.

Philip, Heppner, Ard and Whitaker each face up to 20 years in prison, three years of supervised release if convicted on the wire fraud charges. They also face a fine of $250,000 or twice the gross gain or loss from the offense, whichever is greater, if convicted.

The conspiracy charges carry up to five years in prison and the same fine and supervised release provisions for the four men, should they be convicted.

If convicted on the misbranding charges, Ard and Whitaker could get up to three years in prison, a year of supervised release and the same fine.

Philip faces up to five years in jail, three years supervised release and the same fine if convicted of lying to the FDA.

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