Device Company Executives Get Prison For Roles in Unauthorized Clinical Trials

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By Dana A. Elfin

Three former executives at medical device manufacturer Synthes Inc. were sentenced to prison Nov. 21 for their roles in conducting clinical trials of bone cements without Food and Drug Administration approval (United States v. Norian Corp., E.D. Pa., No. 09-cr-403-LDD, sentencing 11/21/11).

Three elderly patients died on the operating table during the clinical trials.

Judge Legrome D. Davis of the U.S. District Court for the Eastern District of Pennsylvania sentenced Michael D. Huggins, who had been president of Synthes North America when the clinical trials were conducted, and Thomas B. Higgins, who had been president of Synthes Spine Division during the relevant time period, to nine months in prison, three months of probation, and fines of $100,000 each. Higgins reported to Huggins at Synthes. In addition, John J. Walsh, formerly Synthes's director of regulatory and clinical affairs, was sentenced to serve five months in prison and pay a $100,000 fine.

Although each of the former executives had pleaded guilty to a single misdemeanor of introducing adulterated and misbranded medical devices into interstate commerce in violation of federal food and drug law, each sought probation and a $100,000 fine instead of jail time (191 HCDR, 10/5/10). In contrast, the government argued that all the executives should serve prison time because of the egregiousness of their conduct.

For example, in a presentencing memorandum for Huggins, the government said that Huggins, as the highest-ranking official of the four individual defendants in the case, “had a duty to prevent or stop crimes committed at Synthes by persons whom he supervised.”

In a presentencing memorandum for Higgins, prosecutors said Higgins was “a key participant in illegal human experiments beyond the scrutiny of the FDA that subjected frail and elderly patients—among the most vulnerable members of our society—to grave risk.”

In addition, the government said both Huggins and Higgins “belonged to a corporate culture that encouraged ignoring safety concerns and misleading the FDA.”

“This is a case where the regulations in place to perform clinical trials and protect human subjects were not just ignored, they were flouted,” the government wrote in Huggins's presentencing memorandum.

Still awaiting sentencing is Richard E. Bohner, formerly Synthes's senior vice president of operations.

Trend Toward Prosecuting Individuals

The sentencing of Huggins, Higgins, and Walsh illustrates a trend toward the government ramping up its prosecutions of corporate officers and managers of drug and device companies for health care fraud at their companies. The responsible corporate officer doctrine, known as the Park Doctrine, is named after United States v. Park, 421 U.S. 658, 673 (1975), in which the U.S. Supreme Court affirmed a misdemeanor criminal conviction of a company officer who was held responsible for regulatory violations in a food storage warehouse, even though he denied any knowledge of the conditions.

Government officials have said that the government likely will bring an increasing number of such cases against individuals at both drug and device companies (187 HCDR, 9/27/11).

In a Nov. 21 press release, Maame Ewusi-Mensah Frimpong, acting deputy assistant attorney general for the Justice Department's Consumer Protection Branch in Washington, said, “The Department of Justice is committed to holding individual corporate officers accountable for their criminal conduct … . [T]hese senior managers knew about and participated in unlawful human experimentation that disregarded the safety of all members of society. Because of the court's sentences today, they will answer for their actions.”

Holding Execs Accountable ‘Priority’ for OIG

Nick DiGiulio, special agent in charge for the Department of Health and Human Services Office of Inspector General, said in the statement: “Holding executives accountable for corporate wrong doing continues to be a priority for our office.” He added, “We are hopeful that the sentences handed down … will encourage executives in the health care industry to play by the rules and to consider patient safety over profits.”

U.S. Attorney Zane David Memeger of the U.S. Attorney's Office for the Eastern District of Pennsylvania, Philadelphia, added that the “sentences should clearly put health care industry executives on notice that when they violate the law and harm individuals for the sake of corporate profits, they will go to prison.”

The government said the case is one of a small number of cases in which company executives have been sentenced for a misdemeanor violation of the Federal Food, Drug and Cosmetic Act. Huggins was immediately remanded; Higgins was given two weeks to report to prison; and Walsh must report on Nov. 28, the government said.

“The public's trust in the medical device industry is compromised when … executives put aside their integrity for profits,” Antoinette V. Henry, special agent in charge of FDA's Office of Criminal Investigations, Metro Washington Field Office, said in the Nov. 21 statement. “The conviction of these pharmaceutical executives exemplifies the successful efforts by FDA's Office of Criminal Investigations and its law enforcement partners to hold these individuals accountable and not allow them to escape liability by hiding behind a corporate shield.”

Charges Filed in 2009

The government originally filed charges against Synthes Inc., its wholly owned subsidiary, Norian Corp., and the four top executives in June 2009, claiming they conspired to conduct unauthorized clinical trials from May 2002 until fall 2004 for off-label use of the bone cements Norian XR and Norian SRS to treat vertebral compression fractures of the spine.

In late 2010, Synthes Inc., the U.S. branch of a Swiss company that specializes in products to treat damaged human bone, and Norian pleaded guilty in connection with the unapproved trials (230 HCDR, 12/2/10).

In accordance with the terms of plea agreements the companies executed in October 2010, Norian was ordered to pay the government $22.5 million, and Synthes was ordered to pay a total of $669,800 in fines and forfeiture (191 HCDR, 10/5/10).

Corporate Integrity Agreement

As part of the global resolution of the case, Synthes also entered into a corporate integrity agreement with HHS OIG. The agreement requires the company to implement a compliance program designed to minimize future improper conduct.

In April, Johnson & Johnson announced a $21.3 billion buyout of Swiss orthopedic device manufacturer Synthes, a merger the health conglomerate said would result in the largest business within J&J's medical devices and diagnostics segment.

Huggins was represented by Gregory L. Poe of Poe & Burton PLLC in Washington and by Catherine M. Recker of Welsh & Recker PC in Philadelphia.

Walsh was represented by Craig D. Margolis and William E. Lawler III of Vinson & Elkins in Washington.

Higgins was represented by Adam S. Hoffinger and Robert A. Salerno of Morrison & Foerster LLP in Washington and Michael V. Sachdev of Morrison & Foerster LLP in San Francisco.

Bohner was represented by Brent J. Gurney, Eric J. Mahr, and Howard M. Shapiro of WilmerHale in Washington.

The case was prosecuted by Assistant U.S. Attorneys Mary E. Crawley and Gerald B. Sullivan, of the U.S. Attorney's Office in Philadelphia, and Laura A. Pawloski, Associate Chief Counsel, FDA Office of Chief Counsel, Washington, with assistance from the Consumer Protection Branch of the Department of Justice, Washington.


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