Vascular Solutions (NSDQ:VASC) is under investigation by the U.S. Attorney’s Office for the Western District of Texas for alleged off-label promotion of its Vari-Lase venous disease treatment system.
The federal investigators joined a probe spurred by a whistleblower’s allegations that the company engaged in off-label promotion and provided illegal kickbacks to physicians to sell Vari-Lase products, in particular the Vari-Lase Short Kit.
As of the end of last year the device accounted for about $410,000 in sales, representing less than 0.1% of the company’s total U.S. revenue, according to a Vascular Solutions regulatory filing. The device hasn’t been the target of any recalls and has not been the subject of any reported serious adverse clinical events, the company noted.
The Vari-Lase Short Kit, which has had 510(k) clearance since 2007, is a solid-state diode laser indicated for treatment of varicose veins and varicosities in the great saphenous vein, which runs from the leg to the thigh.
The whistleblower complaint, filed by former sales employee Desalle Bui in November 2010 and unsealed this week, claims the company marketed the device for use on perforator veins and that it further promoted re-use of its single-use products. All in all, the complaint says Vascular Solutions cost the government about $20 million in damages.
After 3 extension of time, the federal government opted to intervene and join the investigation, according to Vascular Solutions’ report.
"The company believes the allegations are factually inaccurate and without merit, and therefore the Company intends to both fully comply with the U.S. Attorney’s investigation and defend the litigation," according to the SEC filing.
In an unrelated report, Vascular Solutions announced that it spent $3 million to acquire St. Jude Medical’s (NYSE:STJ) Venture wire control catheter, agreeing to an up-front payment of $2.5 million and another $750,000 in milestone payments.
VASC shares saw a slight dip today, decreasing by 0.2% to close at $13.47.