The Department of Justice announced July 20, 2016 that two former Big Pharma executives were convicted by a jury on 10 counts of introducing adulterated and misbranded medical devices into interstate commerce. William Facteau, 47, of Atherton, Cal., and Patrick Fabian, 49, of Lake Elmo, Minn., were convicted after a six week trial.
As part of the deal, Johnson & Johnson subsidiary Acclarent must pay the U.S. government $18 million to settle a whistleblower lawsuit under False Claims Act violations.
Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said, “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.”
Medical Device Illegally Marketed
Acclarent made the RElieva Stratus Microflow Spacer – also known as Stratus – meant to be used with saline solution to maintain sinus openings after surgery.
Acclarent, however – at the behest of Mr. Facteau (CEO) and Mr. Fabian (VP of Sales) – marketed Stratus as a drug delivery device for corticosteroids, even after FDA rejected Acclarent’s request to include that indication (for approved uses) in 2007. Acclarent went so far as to produce a video that demonstrated Stratus being used with the corticosteroid Kenalog-40.
Trial evidence demonstrated Mr. Facteau and Mr. Fabian moved to develop and market products, including the Stratus, as a drug delivery device, to create a projected revenue stream to make the company an attractive business for either an initial public offering or an acquisition.
Facteau and Fabian were acquitted by the jury on 14 felony counts of fraud, but convicted on ten misdemeanor counts related to the same conduct.
A charge of violating the Food, Drug and Cosmetics Act can bring a sentence of no more than one year in prison on each count, one year of supervised release, and a fine of $100,000, or twice the gross gain or loss. Actual sentences for federal crimes are usually lower than the maximum penalties. A federal district court judge imposes sentences based on U.S. Sentencing Guidelines and other statutory factors.
False Medicare Claims
As a consequence of the illegal marketing of Facteau and Fabian, health care providers who submitted claims to Medicare and other federal health programs for that illegal use did so under false pretenses.
Whistleblower says Big Pharma Execs need Prison Time
Melayna Lokosky, a former Acclarent sales rep who blew the whistle on the two executives, believes they should be held accountable and deserve to serve prison time. Ms. Lokosky has initiated a petition at Change.org. She wants them to serve the stiffest penalties possible under law.
She was fired from her position at Acclarent after objecting to the illegal marketing. She started a Facebook page, Killing My Career to help publicize the Acclarent story. She has also become something of an advocate for women involved in transvaginal mesh lawsuits, for which upwards of 100,000 women who have filed lawsuits have witnessed an almost complete major media blackout.
Ms. Lokosky states on her petition: “If you were injured by a medical device then you’ll want to pay attention to this story. Don’t miss your opportunity to weigh in on sending convicted white collar medical device executives to jail. Especially if your injury stems from a company first funded by NEA – New Enterprise Associates (like Gynecare or Essure because they also funded Acclarent.”
“We cannot allow the courts to encourage, replicate and reward unethical and illegal behavior that a jury of peers already CONVICTED on, by going soft on medical device executives during their sentencing.”
Accountability for Medical Device Executives
The case is unusual for holding executives of a major corporation accountable rather than simply imposing civil fines.
U.S. Deputy Attorney General Sally Yates issued a memo published in fall 2015, which stated: “One of the most effective ways to combat corporate misconduct is by seeking accountability. (Such) accountability (deters) future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.”
Medicare, Medicaid Fraud Team
The whistleblower lawsuit was filed under the Health Care Fraud Prevention and Enforcement Action Team, created by Health and Human Services in May 2009 to reduce and prevent financial fraud in Medicare and Medicaid. The False Claims Act allows whistleblowers to alert lawmakers to financial crimes and share in a portion of the recovery. The DOJ has reportedly recovered more than $30 billion since January 2009.
Whistleblower says Big Pharma Execs need Prison
The civil lawsuit was filed in the District of Massachusetts United States ex rel. Melayna Lokosky v. Acclarent, Inc.
Stratus was taken off the market in May 2013 and marketing for the device was discontinued. According to the DOJ, it is no longer commercial available in the U.S.
Johnson & Johnson acquired Acclarent in 2010, which, according to J&J, was before the executives broke federal laws.
Attorneys for Mr. Facteau & Mr. Fabian said they will appeal the misdemeanor convictions.