- Medtronic has agreed to pay a combined $51 million to resolve Department of Justice (DoJ) investigations into deceptive medical device marketing practices that could have endangered patient safety as well as kickback payments to hospitals.
The DoJ probes involve questionable conduct by two companies, ev3 and Covidien, before Medtronic acquired them.
According to the plea deal, ev3 agreed to pay $17.9 million for allegedly marketed its Onyx Liquid Embolic System neurovascular device for unapproved surgical uses.
The FDA had approved the Onyx device as a liquid embolization device surgically injected into blood vessels to block blood flow to arteriovenous malformations in the brain. However, ev3 encouraged surgeons to use Onyx outside the brain for “unproven and potentially dangerous surgical uses” over a period of years, from 2005 to 2009, the DoJ said in a press release.
In 2008, FDA officials told ev3 executives that a study would be required for uses of Onyx outside the brain. Instead of conducting a study, ev3’s sales representatives continued to attend surgical procedures and provided directions to surgeons about how to use Onyx for unapproved surgical procedures outside the brain.
According to DoJ, ev3’s management also set-up a system of sales quotas and bonuses that motivated sales representatives to sell Onyx for unapproved uses and trained the sales force how to instruct physicians on unapproved uses of the device.
“Unnecessarily putting patients at risk to increase profits, as the government alleged in this case, will not be tolerated,” said HHS OIG Special Agent in Charge Christian Schrank. “We will continue to work with our federal partners and hold accountable companies that use deceptive practices to increase their bottom line.”
In addition, Covidien, another Medtronic subsidiary, agreed to pay $13 million for allegedly paying kickbacks to induce the use of its Solitaire mechanical thrombectomy device by hospitals and other healthcare organizations. The Solitaire device restores blood flow and retrieves a blood clot in stroke patients.
DoJ alleged that Covidien caused false claims to be submitted to Medicare and Medicaid by paying kickbacks to hospitals and institutions to induce them to use Covidien’s Solitaire device. Specifically, the DoJ alleged that after receiving FDA clearance for the Solitaire device, Covidien set up a registry to pay hospitals and institutions to collect data about user experiences with the device.
Beginning in August 2014, Covidien paid a fee to hospitals and institutions that participated in the registry each time they used a new Solitaire device and reported clinical data about their practices for treating stroke patients to the company. Covidien solicited hospitals and institutions for the registry in order to convert their business from the competitor’s product or persuade them to continue using Covidien products and “knowingly and willfully” used the registry as a means of increasing device sales.
“Illegal kickbacks bring fraud and abuse into the Medicare system,” said US Attorney for the Central District of California Nicola Hanna. “As part of an aggressive marketing campaign for its medical device, Covidien allegedly found a way to subsidize facilities that agreed to use its product – often convincing them not to use devices sold by another manufacturer.”
In a statement, Medtronic said it agreed to pay another $20 million to resolve issues regarding “various market-development and physician engagement activities” conducted by Covidien and ev3, bringing the total fines paid by Medtronic to $50.9 million.
“Medtronic cooperated fully with the Department of Justice during its investigation, and we believe our ongoing, rigorous compliance programs and ethical practices enabled us to reach a fair resolution of these cases. We are pleased to put the matters behind us and will continue to fulfill our mission to alleviate pain, restore health, and extend life for millions of people around the world,” the company said in its statement.