Former Johnson and Johnson executives are convicted over off label marketingBMJ 2016; 354 doi: https://doi.org/10.1136/bmj.i4179 (Published 27 July 2016) Cite this as: BMJ 2016;354:i4179
Two former executives at Acclarent, a division of Johnson and Johnson, have been convicted of selling medical devices against Food and Drug Administration (FDA) recommendations but acquitted of graver felony charges of fraud and conspiracy.
William Facteau, former chief executive officer of Acclarent, and Patrick Fabian, former vice president of sales, launched the Relieva Stratus Microflow Spacer as a steroid delivery device after the FDA had expressly rejected that application and approved it only as a device for maintaining open sinuses, federal prosecutors said.
The two men hoped to rapidly boost the value of the company to find a buyer and hid the nature of their marketing from prospective buyers including Ethicon, the Johnson and Johnson device maker that bought Acclarent for $785m (£600m; €715) in 2010, US attorneys alleged.
Facteau earned $30m and Fabian earned $4m from the sale. They stayed with the merged company until 2011, then left.
They were each convicted on 10 misdemeanor counts of introducing adulterated or misbranded medical devices into interstate commerce. Each theoretically carries a maximum sentence of one year of imprisonment, one year of probation, and a fine up to double the proceeds from the misdemeanor.
They were acquitted on 14 felony counts of fraud and one of conspiracy. “After five years of investigation and a six week trial, the jury flatly rejected the government’s core fraud and conspiracy theories,” said Frank Libby, Fabian’s lawyer, in a statement. Both men’s lawyers said that they would seek to overturn the 10 convictions. A spokesperson for Ethicon declined to comment on the case.
On 25 July, five days after the men’s convictions, Acclarent, still a subsidiary of Johnson and Johnson, paid $18m to settle federal false claims accusations against the company itself. Of that settlement, $3.5m went to Melayna Lokosky, a former sales representative at Acclarent who first alleged wrongdoing and brought a suit against her old employer.
The “qui tam” provision of the False Claims Act, which rewards corporate whistleblowers with large payouts from court settlements, has enabled the government to recover over $19bn in healthcare false claims since 2009.
The US Department of Justice is likely to be encouraged by its partial success in the criminal prosecutions, which are part of a new policy of holding individuals accountable for corporate misbehavior. The first test case of the new approach ended last month in the acquittal of former Warner Chilcott president Carl Reichel, who was accused of masterminding a physician kickback scheme.1
Three sales managers at Warner Chilcott had already pleaded guilty to similar allegations and the company had paid $125m to settle the government’s case, including a $20.7m criminal fine. US Attorney Carmen Ortiz, in a statement put out after Reichel’s acquittal, said, “While we respect the jury’s verdict, we believe that the charge filed against Carl Reichel was supported by the facts and the law. Cases against high level business executives are difficult to prove and are hard fought. Nonetheless they are essential in order to deter corporate executives from engaging in wrongful conduct that improperly attempts to influence doctors.”
Another kickback case is due to start shortly, of two sales representatives at Insys indicted last month in a scheme that allegedly gave high opioid prescribers lavish dinners and visits to strip clubs. Another sales representative and a nurse practitioner have already pleaded guilty to participating in the scheme.
Last week Bristol-Myers Squibb paid $30m to settle fraud and kickback allegations brought by the state of California in concert with three former sales representatives turned whistleblowers. In that case, doctors were treated with theatre and sporting tickets, golf outings, and trips to a Los Angeles Lakers basketball camp.