Criminal device marketing, or something in that vein

The marketing of medical devices is receiving greater scrutiny.  Manufacturers of medical devices are increasingly being exposed to a combination of civil and criminal exposure for off-label device promotion that stretches beyond the marketing permitted by limited FDA device approvals. One company—Minnesota-based Vascular Solutions Inc.—has experienced the recent crackdown first hand, after the company’s promotion of a varicose-vein devices led first to a whistleblower lawsuit and then to criminal charges from the Department of Justice (DOJ).

Vascular Solutions

In 2012, the Twin Cities Pioneer Press reported that the government intervened in a whistleblower lawsuit against Vascular Solutions, which alleged that the off-label promotion of the company’s varicose-vein devices resulted in $20 million in damages to the federal government. In 2014, the fraud became a criminal issue when Vascular Solutions’ CEO was indicted for conspiring to sell devices for unapproved purposes.  The criminal investigation was ongoing when the company settled the whistleblower lawsuit for $520,000.

DOJ

According to reporting by the StarTribune, John Lundquist—attorney for the indicted CEO, Howard Root—said that the DOJ is trying to do is get the attention of medical device companies.  Lundquist added, in an address to medical device company executives at a legal-compliance forum, “the Justice Department is making it known that they are going to prosecute individuals whenever they can, and it is probably folks like you in this room.”

Cost

Although Lundquist, Vascular Solutions, and Root contend that the allegations are baseless, Mark DuVal, a device and biotech lawyer in Minneapolis, told the StarTribune that the indictment and civil lawsuits are costly either way. Duval estimated that it would cost Root and Vascular Solutions about $20 million to go all the way to trial and defend against the charges.

FDA approval

Any impropriety in the promotional tactics of Vascular Solutions comes down to whether it violated FDA regulations by promoting an FDA-approved medical device for something other than its approved indication or use. Such a sale, if outside the scope of FDA approval, can render a device mislabeled or adulterated. As made clear by the indictment, the sale of mislabeled or adulterated devices can be a criminal manner. Although the DOJ typically focuses its scrutiny of off-label promotion for drug manufacturers, according to the StarTribune, the DOJ has secured billions in settlements over such unapproved marketing.

Marketing

At least for Vascular Solutions, there is still an open question about whether the company was promoting an approved or unapproved use. However, approved or unapproved, the DOJ is sending a message that for all medical device companies, marketing techniques are under a watchful eye. The shift has taken place on a DOJ policy level. According to the StarTribune, assistant attorney general for the Justice Department’s criminal division announced in 2014 that the DOJ changed its policies so that all qui tam lawsuits are automatically shared with criminal prosecutors.