Medtronic Inc. (NYSE:MDT) might have breathed a sigh of relief last month when three of its biggest competitors in the medical device industry were accused in a whistleblower lawsuit of promoting the off-label use of biliary stents in hundreds of thousands of patients.
But the relief was short-lived, after a similar “qui tam” lawsuit filed in the U.S. District Court for Massachusetts was unsealed Feb. 19, accusing the Fridley, Minn.-based monolith of similar violations.
The lawsuit alleges that Medtronic promoted the use of the biliary stents to treat obstructions in peripheral blood vessels. The biliary stents faced a lower regulatory hurdle because they’re designed for use in cancer patients who are not expected to survive for long. Although physicians are allowed to use devices for off-label treatments, the companies that make them are barred from promoting or encouraging such practices.
Two former Medtronic employees, Tricia Nowak and Enda Dodd, filed the whistleblower suit on behalf of the U.S. government, 22 states and the District of Columbia. The suit also accuses the company of retaliating against and ultimately firing the pair after they objected to the alleged off-label promotion. Nowak worked for Medtronic as a sales rep in its endovascular business from 2005 until August of last year, according to court documents. Dodd worked as a senior research manager manager for the company for three years starting in 2003.
According to the complaint, roughly 90 percent of Medtronics’ biliary stent sales are made for off-label use. The suit accuses the company of Medicare fraud and filing fraudulent clearance applications with the Food & Drug Administration. Dodd, who was brought into Medtronics’ Santa Rosa, Calif., offices to help develop peripheral vascular products. He was assigned to work on the Racer biliary stent, “to review and resolve possible quality issues on the Racer stent prior to commercial release,” according to court documents.
“As Mr. Dodd examined the design process employed and the product evaluations on file, a hybrid development strategy appeared. The design process implemented was governed by the ‘FDA Guidance for the Content of Premarket Notifications for Metal Expandable Biliary Stents’ while the sole and only commercial intent, as articulated by Trung Pham, (Senior Product Manager) and others, was the treatment of stenosed (blocked) renal (kidney) arteries,” according to the complaint. “Additionally, the previously approved packaging specifications called up biliary device directions for use and product identification. Mr. Dodd was astonished to learn these facts.”
Dodd also reviewed the Medtronic record of biliary stent development “and was alarmed to learn that the entire biliary stent platform inventory was actually developed for vascular use,” allegedly driven by CEO Bill Hawkins, who was then senior vice president of the company’s vascular division.
“[Hawkins] was exerting great pressure on the organization to build new revenue from peripheral vascular products,” according to court documents.
Dodd allegedly registered oral and written protests against the plan to market the biliary stents for vascular applications to Hawkins and other Medtronic officials, but “Mr. Dodd’s emerging objections to this situation were immediately rebuffed with Mr. Dodd being alternately counseled or threatened about opposition to the scheme.”
“Mr. Dodd learned that his precaution and objection to the fraudulent FDA scheme was not appreciated by management,” according to the lawsuit. He was eventually let go under circumstances the lawsuit alleges were retaliation for his objections.
Medtronic also allegedly counseled sales reps, including Nowak, to target doctors specializing in peripheral vascular disease, actively marketed the devices to peripheral vascular specialists (largely ignoring the gastroenterologists and hepatologists who would use the devices for their approved applications), gave sales reps mandatory quotas and bonuses for off-label sales and filed false or fraudulent reimbursement claims.
Nowak was allegedly fired after registering her objections to the alleged off-label promotion scheme, for failing to meet the company’s sales quota requirements, despite her reportedly “stellar” sales record with Medtronic.
Medtronic said it “is aware of the complaint and intends to vigorously dispute its allegations, including filing a motion to dismiss at the outset of the case. We don’t comment on any specific allegations,” according to the Wall Street Journal.
In January, another qui tam lawsuit filed in the U.S. District Court for Northern Texas accused Boston Scientific (NYSE:BSX), Abbott (NYSE:ABT) and Johnson & Johnson (NYSE:JNJ) of engaging in similar schemes. The practice is also the subject of a federal investigation being run out of the Boston offices of the Dept. of Justice.