Johnson & Johnson (NYSE:JNJ) subsidiary Acclarent will pay $18 million to resolve allegations over false claims submitted to Medicare and other federal health care programs in relation to marketing its Relieva Stratus MicroFlow sinus spacer as a drug-delivery device without FDA clearance.
The company won FDA clearance in 2006 to market the Stratus as a spacer to be used only with saline to maintain sinus openings following surgery, but the government alleged that Acclarent intended for the Stratus to be used as a drug-delivery device, and that the device was designed for the use.
“The FDA approval process serves an important role in ensuring that federal health care participants receive devices that are safe, effective and medically appropriate. We will not permit companies to circumvent that process and put profits over patient safety,” Justice Department civil division head Benjamin Mizer said in a press release.
The government alleged that Acclarent marketed the stratus as a drug delivery device even after a 2007 rejection from the FDA as the company sought to expand the indications. Company employees even trained physicians using a video that demonstrated the device being used with a prescription corticosteroid, according to the government release.
In 2010, Acclarent added a warning to its label regarding the use of the Stratus as a drug delivery device, but the government alleged that the company continued to market the Stratus as a drug delivery device. In May, 2013, Acclarent discontinued all sales of the device and withdrew all FDA marketing clearances for it.
The government further alleged that Acclarent marketed the Stratus as a drug delivery device even after the FDA rejected the company’s 2007 request to expand the approved uses for the Stratus. For example, Acclarent employees trained physicians using a video that demonstrated the Stratus being used with prescription corticosteroid Kenalog-40 and also used a white, milky substance resembling Kenalog-40 when demonstrating the Stratus.
Former CEO William Facteau and ex-sales vice president Patrick Fabian were convicted by a jury after a 6-week trial on 10 misdemeanor counts of “introducing adulterated and misbranded medical devices into interstate commerce.” Facteau is now chairman, president & CEO of EarLens, and Fabian was listed as the CCO of NxThera as of 2014.
The jury acquitted both defendants on 10 counts of felony adulteration and misbranding, 3 counts of wire fraud and 1 count of conspiracy. Four of the felony charge initially brought against the pair were dismissed before the case went to trial, according to Steptoe & Johnson, the law firm representing Facteau.
The remaining charges were related to the Relieva Stratus sinus dilation device. Prosecutors alleged that Facteau and Fabian launched the Relieva Stratus device intending it to be used as a steroid delivery device, even after the FDA had specifically refused Acclarent’s request to clear it as a drug-delivery device without further regulatory submissions.