Medtronic Will Pay $51 Million To Settle DOJ Investigation Against Two Company Acquisitions
Medtronic Will Pay $51 Million to Settle DOJ Investigation Against Two Companies It Acquired
By Alex Keown
Medtronic will pay a total of nearly $51 million to resolve three legal claims against Covidien and ev3 Inc., two companies that are now part of the Ireland-based medtech company. Medtronic itself had no role in the wrongdoings that resulted in the multi-million fines.
According to the U.S. Department of Justice, the payments resolve charges against the companies owned by Medtronic that they made false claims about devices, and also engaged in kickback schemes to promote unauthorized use of the devices. ev3 was purchased by Covidien plc in 2010 and became part of Medtronic when it acquired Covidien in 2015. As part of the agreement, ev3 agreed to plead guilty to a misdemeanor and pay the settlement.
Medtronic will make a series of three payments to settle the allegations. First, Medtronic will pay $17.9 million to settle a matter concerning ev3’s Onyx Liquid Embolic System (Onyx), which is approved for the limited use of blocking blood flow to arteriovenous malformations in the brain. The payment Medtronic agreed to make were related to issues that occurred between 2005 and 2009. The DOJ said the FDA approval for the Onyx system was limited, however sales representatives from ev3 “encouraged surgeons to use Onyx in large quantities for unproven and potentially dangerous surgical uses outside the brain.” The ev3 sales team, according to the DOJ, touted unapproved and potentially dangerous uses of the Onyx system, “even after FDA officials told ev3 executives that they had specific safety concerns regarding uses of Onyx outside the brain at a 2008 meeting.”
FDA Commissioner Scott Gottlieb said consumers rely on the FDA to ensure a reasonable assurance of safety and effectiveness for the approved uses of medical devices. When the regulatory authority of the FDA is ignored and manufacturers push the use of devices outside of approved parameters, Gottlieb said they “undermine these crucial assurances and put lives at risk.” He noted in a statement that the DOJ and FDA investigators were diligent in investigating a “bad actor” that pushed for unapproved use of a device.
Medtronic said it will pay $13 million to resolve the investigation of the registry of the Systematic Evaluation of Patients Treated With Stroke Devices for Acute Ischemic Stroke (STRATIS) device. The settlement is a compromise of disputed claims and Medtronic makes no admission that the STRATIS Registry was improper or unlawful, the company said.
Medtronic will make a $20 million payment to resolve the issue concerning “various market-development and physician engagement activities conducted by legacy Covidien and ev3 Peripheral Vascular and endoVenous businesses,” the company said. As with the STRATIS payment, Medtronic’s payment does not come with an admission of guilt or that anything was improper.
Those two settlements, combining for $33 million, related to “historical conduct” that “began and largely concluded” prior to Medtronic’s 2015 acquisition of Covidien LP and ev3, Inc.
Medtronic said it is committed to maintaining the “highest standards of ethical conduct and compliance with all applicable regulatory guidelines.” Medtronic added that it has made “significant investments” to ensure it fulfills its obligations to “do business the right way.”
Since its acquisition of Covidien and ev3, Medtronic has initiated additional compliance measures to prevent potential violations in the future. Medtronic said it fully cooperated with the investigation and is pleased to put the matter behind it. Medtronic said it will continue to fulfill its mission to “alleviate pain, restore health and extend life for millions of people around the world.”