Ex-Synthes Executives Excluded From Federal Healthcare Programs

Ex-Synthes Executives Excluded From Federal Healthcare Programs

October 12th, 2012 // 3:07 pm @

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In the latest example in which the federal government is trying to get tough with drug and device makers, former executives at Synthes, which is now owned by Johnson & Johnson, have been excluded from participating in federal healthcare programs, according to details on the web site of the US Department of Health & Human Services Office of Inspector General.

The move means that Michael Huggins, former head of Synthes North America; Tom Higgines, former head of Synthes Spine; former vp of operations Richard Bohner; and John Walsh, former head of regulatory affairs, will no longer be able to do business with such programs as Medicare and Medicaid. Effectively, this makes it significantly harder for them to obtain similar jobs, since nearly every company wants to do business with these programs.

The exclusions are not surprising, though, given the sensational events that led the OIG to take this step. The former execs had recently served time in prison for their roles in unapproved clinical trials of a bone-cement drug that led to several patient deaths. All four pleaded guilty to one misdemeanor count of shipping an adulterated and misbranded product in interstate commerce.

Their guilty pleas were made under the Responsible Corporate Officer Doctrine, which meant they accepted responsibility for running the unauthorized trials and promoting the product for unapproved uses, although they did not concede they were directly involved in any crime. The move by prosecutors was unusua because, until then, no drug or device exec had gone to prison for such a charge (read this).

The exclusions were made under Section 1128 of the Social Security Act and there is no limit specified on their exclusions (see this). To see details about each of the former execs, go to this page and type in their names.

Here is some background from a previous post we wrote: From May 2002 until fall 2004, a Synthes subsidiary called Norian, as well as Synthes and the former execs, ran unauthorized trials of their Norian XR and Norian SRS devices, which were bone cements used in surgeries to treat vertebral compression fractures of the spine, or VCR, a painful condition commonly suffered by the elderly, according to the feds.

The surgeries were performed despite a warning on FDA labeling for Norian XR that cautioned against this use, and in the face of serious medical concerns about safety when used in the spine, according to the feds. But they apparently disregarded the warnings. For instance, the feds say that, before the marketing program began, pilot studies showed the bone cement reacted chemically with human blood in a test tube to cause blood clots. The research conducted in a pig also showed that such cement-caused clots became lodged in the lungs.

Just the same, Synthes marketed the device for VCFs without conducting testing that needed FDA approval, the marketing did not stop until after a third patient had died on the operating table. The trials were conducted at various US hospitals and selected surgeons were approached during so-called ‘Test Market Kick-Off’ meetings and a forum in 2003 and early 2004, according to the feds, who said about 52 spine surgeons were trained.

As for the Norian subsidiary, the unit pleaded guilty to one felony count of conspiracy to “impair and impede the lawful functions” of the FDA and commit crimes against the US, as well as 110 misdemeanor counts of shipping adulterated and misbranded Norian XR in interstate commerce. The parent company, Synthes, was charged with one misdemeanor count of shipping adulterated and misbranded Norian XR in interstate commerce. A $23 million fine was paid.

Last year, J&J purchased Synthes for about $20 billion. The move offered a significant strategic advantage. The health care giant gained a market-leading position in trauma products and quickly became a dominant player in the $30 billion orthopedic market. The deal was cheered by investors who were otherwise dealing with an ongoing series of product recalls that were hurting sales and the storied J&J reputation among doctors and patients.

An in-depth story recently ran in Fortune if you would like to read still more.


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