Stryker Biotech agreed to cough up $15 million and and pleaded guilty to a single misdemeanor today, ending federal charges that it ran an illegal off-label promotion scheme.
The Stryker Corp. (NYSE:SYK) subsidiary must pay the $15 million fine within 5 days and was ordered by Judge George O’Toole Jr. to pay a $125 assessment "forthwith," according to court documents. Charges are still pending against former Stryker Biotech president Mark Philip and 2 of the 3 former sales managers originally indicted by the feds.
Yesterday, the feds dropped all charges against former sales representative David Ard, after prosecutors said it would be "in the interest of justice" to do so. A bid by William Heppner and Jeffrey Whitaker, the former sales agents, to quash 1 count of conspiracy to defraud the U.S. was denied by O’Toole today in federal court in Boston.
The original indictment alleged 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 charged Stryker and Philip with lying to the FDA about the number of patients treated each year with OP-1 Putty.
The case went before a jury last week in the U.S. District Court for Massachusetts. O’Toole granted Philip’s move to sever the charges against him, meaning that Philip will be able to use communications he had with Stryker Biotech lawyers that would otherwise fall under attorney-client privilege.