Investing.com -- Acclarent, a California-based medical device manufacturer and subsidiary of Johnson & Johnson (NYSE:JNJ), agreed on Friday to pay an $18 million fine to settle charges that the company enabled health care providers to submit false claims to Medicare by distributing a sinus spacer product without receiving approval from U.S. federal regulators.
For a period of several years, beginning in 2006, Acclarent received clearance from the U.S. Food and Drug Administration to market a market device called the Relieva Stratus MicroFlow Spacer in cases when saline was required was to maintain sinus openings in post-surgery periods. A year later, Acclarent allegedly continued to promote Stratus as a drug delivery device for a prescription corticosteroid without receiving clearance from the FDA for an expanded use clearance. By 2010, the company added a warning label to the Stratus' packaging warning of the use of active drug substances within the device, according to court filings, but still continued to market the device for drug delivery, the U.S. Justice Department said in a statement. The company discontinued the sale of the Stratus device by May, 2013.
"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. "We will not permit companies to circumvent that process and put profits over patient safety."
The settlement comes two days after Acclarent's former CEO William Facteau and former Vice President of Sales Patrick Fabian were convicted of 10 misdemeanor counts of introducing adulterated and misbranded medical devices into interstate commerce. A jury acquitted the former executives of 14 felony counts of fraud. Acclarent's civil settlement with the federal government resolves a lawsuit filed under the whistleblower provision of the False Claims Act.
“It is imperative that medical device companies adhere to FDA approval requirements so that patients are not subject to questionable medical treatments at taxpayer expense,” said Special Agent in Charge Phillip Coyne of the Department of Health and Human Services Office of Inspector General.
Each charge of violating the Food, Drug and Cosmetics Act provides for a sentence of no greater than one year in prison on each count, the Justice Department said in a statement.
Shares in Johnson & Johnson inched down 0.03 or 0.02% to 125.00 in after-hours trading.