On December 4, 2018, the United States Department of Justice announced settlements with two of Medtronic’s subsidiaries, Covidien LP and ev3, Inc.
ev3 Allegations and Settlement
ev3, a Minnesota-based medical device manufacturer, found itself in hot water over the distribution of its neurovascular medical device, Onyx Liquid Embolic System. Onyx was approved by the Food and Drug Administration (FDA) as a liquid embolization device that is surgically injected into blood vessels to block blood flow to arteriovenous malformations in the brain. The FDA approved Onyx only for use inside the brain.
However, in spite of the FDA’s limited approval of Onyx, from 2005 to 2009, ev3 sales representatives encouraged surgeons to use Onyx in large quantities for unproven and potentially dangerous surgical uses outside the brain. The company’s sales force continued to highlight unapproved and potentially dangerous uses of Onyx even after FDA officials told ev3 executives in 2008 that they had specific safety concerns regarding uses of Onyx outside the brain and wanted FDA officials told ev3 executives that a study would be required to gain approval for uses of Onyx outside the brain and to ensure that the benefits of the device outweighed the risks.
Instead of conducting the study to ensure the safety and effectiveness of Onyx for uses outside the brain, ev3’s sales representatives attended surgical procedures and provided explicit instructions to surgeons regarding how to use Onyx for unapproved surgical procedures outside the brain. These instructions sometimes included using greater quantities than would be used in the brain. According to the criminal information, ev3’s management also set up a system of sales quotas and bonuses that incentivized sales representatives to sell Onyx for unapproved uses and trained the sales force to instruct physicians on unapproved uses of the device.
“Consumers rely on the FDA to ensure that there’s a reasonable assurance of safety and effectiveness for the approved uses of medical devices. When manufacturers ignore the FDA’s regulatory authority, they undermine these crucial assurances and put lives at risk. Our Office of Criminal Investigations investigated a bad actor who marketed their device for unapproved uses, potentially harming patients,” said FDA Commissioner Scott Gottlieb, M.D. “The ev3 agreement to plead guilty announced by the U.S. Department of Justice today is an example of the FDA’s comprehensive commitment to ensuring the safety of medical devices and investigating companies that put patients at risk. A key part of our overall efforts to promote safe and effective innovation and protect patients is our enforcement work related to unsafe practices and bad actors. In addition to investigating such activities, we’re advancing other new policies to assure post-market device safety, as we recently outlined in our Medical Device Safety Action Plan. The FDA is also committed to fully implementing a new active surveillance system that will enable the agency to harness real-world evidence from medical records and patient registries to more swiftly identify device safety issues and enable more informed decision-making.”
ev3 Inc. was charged with violations of the Food, Drug and Cosmetic Act in federal court in Boston. As part of the criminal resolutions, ev3 has agreed to plead guilty to a misdemeanor offense, pay a criminal fine of $11.9 million, and forfeit $6 million.
ev3 was acquired by Covidien LP in 2010, prior to the criminal conduct at issue here. Covidien was then acquired by Medtronic in 2015. While Medtronic played no role in the criminal conduct, the company has agreed to implement new compensation structures to ensure the sales force responsible for marketing Onyx is not incentivized to sell the device for unapproved uses. Medtronic has also agreed to conduct compliance monitoring related to Onyx sales and marketing.
Covidien Allegations and Settlement
Separate from the ev3 settlement, Covidien allegedly paid kickbacks to induce the use of its Solitaire mechanical thrombectomy device, intended to restore blood flow and retrieve a blood clot in certain stroke patients.
The United States 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, it was alleged that after receiving FDA clearance for the Solitaire device, Covidien launched a registry to pay hospitals and institutions to collect data about user experiences with the device. For roughly two years beginning in August 2014, Covidien paid a fee to hospitals and institutions that participated in a registry every time they used a new Solitaire device and reported certain clinical data about their practices for treating stroke patients to Covidien. Covidien also allegedly solicited certain hospitals and institutions for the registry in order to convert their business from the competitor’s product and/or persuade them to continue using Covidien products, and knowingly and willfully used the registry as a means of increasing device sales.
To settle the civil liability associated with these allegations, Covidien has agreed to pay $13 million.
A Third Settlement
Medtronic has also agreed to pay a $20 million settlement to resolve the an investigation concerning “various market-development and physician engagement activities conducted by legacy Covidien and ev3 Peripheral Vascular and endoVenous businesses,” the company said.
Medtronic also released a statement acknowledging the “significant investments” the company has made in “ensuring that it fulfills its obligations to all of its stakeholders and to do business the right way.”