Federal prosecutors declined to produce evidence Stryker Corp.’s (NYSE:SYK) biotech subsidiary, its former president and three sales reps say could clear them of criminal charges in a federal case alleging the illegal promotion of bone putties.
Hopkinton, Mass.-based Stryker Biotech, former president Mark Philip and the sales reps — national sales director William Heppner and regional managers David Ard and Jeff Whitaker — were indicted last year for allegedly promoting the off-label use of a pair of bone-growth products and lying to the Food & Drug Administration. Stryker and Philip were also charged with making false statements to the FDA.
Two weeks ago the defendants asked prosecutors for a raft of documents they said could undercut the government’s case. After examining Food & Drug Administration documents already released by the feds, the attorneys say they found a "substantial number" from the FDA that "we consider clearly exculpatory," according to court documents.
"We do not agree with your contention that any of the three categories in your October 4 letter constitute exculpatory information," according to an Oct. 18 response from the feds. "With regard to your housekeeping requests regarding particular documents or disks, there was no need for a discovery letter. Consistent with our prior course of dealing, a telephone call requesting a replacement copy or explanation would have sufficed."
The indictment alleged that the defendants created a scheme to bypass the narrow, provisional "humanitarian device exemption" granted to each product 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. The defendants’ lawyers wanted the feds to release any FDA documents that deal with the agency’s terminology for the bone-healing products the defendants are alleged to have encouraged physicians to combine.
But, aside from delivering a few minor "housekeeping" items, the feds declined to produce any of the allegedly exculpatory documents.
"To the extent you seek information regarding products other than Calstrux, we decline to produce the requested information," they wrote. "To the extent discoverable information was contained in the FDA’s files on OP-1/Calstrux, it has been produced."
The defendants had also asked for documents dealing with "any discussion about which Adverse Events should be reported as MDRs," according to court documents.
"We do not agree that information about how adverse events should be characterized is exculpatory to the crimes charged," the feds replied. "To the extent you seek information about products other than OP-1 and Calstrux, we decline to obtain the requested information as not discoverable."
In September, Stryker, Philip, Heppner, Ard and Whitaker moved for the dismissal of 12 of the 16 counts against them, arguing that the U.S. District Court for Massachusetts doesn’t have jurisdiction over them.
Yesterday Stryker reported that third-quarter sales ticked up 6.9 percent and net sales soared 47.5 percent. The Kalamazoo, Mich.-based medical device maker posted net earnings of $337.7 million, or 85 cents per diluted share, on sales of $1.77 billion during the three months ended Sept. 30. That compares with profits of $229.0 million, or 57 cents per diluted share, on sales of $1.65 billion during the same period last year.
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