J&J Settles Acclarent Case for $18 Million

The settlement comes just days after the former executives who ran Acclarent were convicted of misdemeanor charges related to alleged off-label marketing of sinus balloon catheters.

Chris Newmarker

Johnson & Johnson Acclarent subsidiary will pay $18 million to settle a federal whistleblower lawsuit claiming the company marketed a sinus spacer for a drug delivery use not approved by FDA, causing health providers to submit false claims to Medicare and other health care programs.

The news Friday of the settlement comes two days after a federal jury in Massachusetts convicted former Acclarent CEO William Facteau and former sales vice president Patrick Fabian of misdemeanor charges of introducing adulterated or misbranded medical devices into interstate commerce. While the two men were acquitted on more serious felony charges, they still face up to a year in prison from the convictions; their lawyers are filing  motions to set aside the misdemeanor charges on multiple grounds.

Facteau and Fabian helped build Acclarent into a company that was acquired by J&J for $785 million in 2010, but prosecutors claimed the company along the way was engaged in so-called off-label promotion of Relieva Stratus Microflow Spacer sinus balloon catheters. Acclarent had received FDA clearance in 2006 to market the Stratus as a spacer, only to be used with saline to maintain sinus openings following surgery. But proseutors insisted the Stratus all along was intended as a drug delivery device for prescription corticosteroids, including Kenalog-40, and was actually designed and engineered for this use.  

Acclarent in 2010 ended up adding a warning to Stratus's label regarding use of active drug substances, but the government claimed that Acclarent still engaged in off-label marketing.  Stratus sales were discontinued in the U.S. in May 2013, and the comapny agreed to withdraw it FDA marketing clearance. The Stratus is no longer sold in the U.S.

The settlement, and misdemeanor convictions of Facteau and Fabian, are the latest chapter in the federal government's crackdown against off-label use, which has legally been a gray area in medical device regulatory circles. 

"The FDA approval process serves an important role in ensuring that federal health care participants receive devices that are safe, effective and medically appropriate," said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department's Civil Division, said in a news release. 

"We will not permit companies to circumvent that process and put profits over patient safety," Mizer said. 

Whistleblower Melayna Lokosky, the former ENT consultant at Acclarent who has since become a vocal medical device safety blogger, is receiving about $3.5 million through the settlement. "This cycle of medical device fraud which costs employees their jobs, patients and consumers their health or lives, and shareholder and taxpayers billions won't stop until executives are jailed for their crimes," Lokosky said when contacted by Qmed.

Since the U.S. Justice and Health and Human Services departments announced their Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative in 2009, the Justice Department has recovered more than $18.3 billion in cases involving fraud against federal health care programs.

Chris Newmarker is senior editor of Qmed. Follow him on Twitter at @newmarker.

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