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Stryker Biotech to pay $1.35 million to settle Bay State beef

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It took less than 24 hours for Stryker Corp. (NYSE:SYK) to settle a lawsuit filed against its Bay State-based biotech division by Mass. attorney general Martha Coakley for $1.35 million.

Coakley sued Hopkinton, Mass.-based Stryker Biotech yesterday, accusing the firm of illegally promoting the combined use of a pair of its bone growth products and of falsifying Institutional Review Board documents. A settlement, announced this morning, will see Stryker pay $325,000 in civil penalties, $875,000 into an anti-false marketing and consumer protection fund and $150,000 in legal and investigative costs. In a statement emailed late in the day Aug. 27, Stryker said the settlement “does not include any admission of liability.”

The lawsuit accused the company of "subverting clinical and medical review procedures designed to protect patient safety" in falsifying the IRB documents, promoting the use of products in applications not approved by the Food & Drug Administration and "failing to disclose information to Massachusetts physicians and medical professionals about restrictions imposed on the use of its products," according to the complaint.

The case involves separate bone-healing products, each granted a narrow, provisional “humanitarian device exemption” by the FDA. Stryker and four former executives are also fighting a federal beef for allegedly promoting the combination of its OP-1 Implant, OP-1 Putty and the bone void filler Calstrux.

Former Stryker Biotech president Mark Philip and sales managers David Ard, Jeff Whitaker and William Heppner, were indicted by a grand jury on charges of wire fraud and conspiracy. Stryker and Philip were also charged with making false statements to the FDA. Heppner was the company’s national sales director; Ard and Whitaker were regional managers for the western and central territories, respectively.

The federal indictment charges that Stryker and Philip lied to the FDA about the number of patients treated each year with OP-1 Putty. According to a regulatory filing, "certain former Stryker Biotech employees have pled guilty to charges in connection with this matter." If Stryker is found guilty, it could be excluded from "participating in federal and state health care programs, which could have a material effect on Stryker Biotech’s business," according to the filing.

Calls and emails to Stryker seeking comment were not immediately returned.

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