Johnson & Johnson subdiary, Acclarent, settles charges for $18 million with the US government.
A Johnson & Johnson subsidiary company, Acclarent, has agreed to pay the United States government an $18 million fine in order to settle charges regarding the illegal marketing of a medical device.
The deal was disclosed in regulatory filings by Johnson & Johnson and includes the one-time-payment of the respective sum plus interest. According to the Justice Department, the suit was filed in 2011 by a whistleblower from the Johnson & Johnson subsidiary, Acclarent, a saleswoman named Melayna Lokosky, against the company and two of its senior executives.
In 2006, Acclarent managed to receive U.S. Food and Drug Administration (FDA) clearance to sell a device called the Relieva Stratus MicroFlow Spacer which kept sinuses opened for 14 days after surgery. After a year, Acclarent senior managers directed salespeople to market the product as a drug delivery device even though the FDA didn’t clear the product for that use.
The medical device company was bought in 2010 by Johnson & Johnson.
According to an Assistant Attorney General on the case, Benjamin Mizer:
“The FDA approval process serves an important role in ensuring that federal health care participants receive devices that are safe, effective and medically appropriate; we will not permit companies to circumvent that process and put profits over patient safety.”
The civil lawsuit had been kept under seal until the criminal case against the executives was resolved. The suit was filed under the whistleblower provision of the False Claims Act and for her role, Lokosky will receive $3.5 million, plus legal expenses and interest.
The settlement comes after two senior executives, Acclarent’s CEO, William Facteau, and former VP of Sales, Patrick Fabian, were convicted of ten misdemeanor counts for introducing into commerce a misbranded medical device. Each count comes with a sentence of no greater than one year in prison.
A spokesperson for Johnson & Johnson stated that since the wrongdoing became clear, the company has introduced tighter compliance controls. The settlement agreement did not include any admission of liability or wrongdoing on their part since most the illegal conduct happened before Johnson & Johnson acquired Acclarent, in 2010.
What do you think about the settlement and the whistleblower? Should companies be held more accountable for the actions of their subsidiaries?
Image source: Flickr
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