Full article reprinted from "The Gray Sheet" - April 20, 2009
Find out how a $302 million settlement between Quest Diagnostics and the Department of Justice announced April 15 suggests DoJ will go after device firms for knowingly misrepresenting product information in labeling and marketing materials, even if FDA is not actively investigating the matter.
Quest is paying the federal government to settle criminal and civil False Claims Act allegations that a former subsidiary knowingly sold a parathyroid hormone test kit with inaccurate performance claims. The investigation was initiated by a qui tam, or whistleblower, lawsuit filed by a Quest competitor in 2004.
The pay-out is one of the largest recoveries ever in a case involving a medical device, according to DoJ.
It is also unusual because it so directly addresses an area of FDA oversight - the scientific content of product labeling - without other components like kickbacks or billing fraud that have more often attracted the Justice Department to device cases.
Comments by DoJ officials suggest the case should be taken as a sign of more to come.
"This settlement provides further evidence that the Department will vigorously prosecute cases involving violations of the Food, Drug and Cosmetic Act, and will pursue recovery of taxpayer dollars resulting from fraudulent marketing campaigns by medical device manufacturers," said Michael F. Hertz, acting assistant attorney general for the Civil Division.
"In order to safeguard public health, and when appropriate, to recover taxpayer dollars, the government will vigorously investigate allegations that a manufacturer knowingly sold medical devices, such as test kits, that were materially unreliable or provided significantly inaccurate results," stressed Benton J. Campbell, interim U.S. attorney for the Eastern District of New York.
Quest Test "Shifts," Labeling Doesn't - Whistleblower
Quest is principally a clinical laboratory company, rather than a test kit manufacturer, but the investigation targeted Quest's now-defunct Nichols Institute Diagnostics subsidiary, which did make and sell immunoassay kits regulated by FDA until the business closed in 2006.
Nichols' 510(k)-cleared Advantage parathyroid hormone (PTH) immunoassay, launched in the early 1990s, is a fully automated test. It was intended as an update to Nichols' manual Allegro PTH assay that had been established as the standard test to monitor dialysis patients for the hormone since the mid-1980s.
But Tom Cantor, president of Santee, Calif.-based Scantibodies Laboratory, which debuted a competing lab-developed PTH automated assay soon after Nichols' test kit was launched, said he started noticing a problem with the Advantage assay in the late 1990s based on feedback from nephrologists. Analyzing data going back to 1999, Cantor identified a marked upward "shift" in PTH results coming from the automated Nichols assay compared with the standard manual test.
In a 2005 editorial in the journal Seminars in Dialysis, for instance, he cited data showing that, in 1999, results from Advantage were on average more than 50% higher than results from the same samples on Allegro and that results from a 2001-cleared updated Advantage kit (Bio-Intact) were between 29% and 52% higher on average than manual test results at various points between 2003 and mid-2005.
But over these periods, Nichols' FDA-cleared labeling and marketing materials for the Advantage kits claimed close agreement to the manual test values.
This was particularly problematic, Cantor explains, because clinical guidelines for treating kidney disease patients for hyperparathyroidism (a common complication of renal disease that prevents old bone from being replaced with new bone) are based on PTH values expected from the manual assay. Thus, the "shifted" results from the new automated test would likely lead to over-treating of patients with vitamin D drugs and, perhaps, unnecessary surgeries to remove the parathyroid glands, according to Cantor.
"When they switched over to the Advantage, clinicians all relied on [Nichols'] statements that the same results would be obtained from the automated version as with the [manual one]," Cantor said in an interview. "It turns out that somewhere between 1999 and 2000 that was no longer the case."
And based on Medicare claims data from that period accessed by Cantor, there was a "dramatic increase" in parathyroid gland removals, suggesting that about 2,000 "unnecessary surgeries per-year" may have been performed as a result of the shift in Advantage results, he claimed.
In 2001, the lab president met with FDA about the issue. He also attempted to alert various dialysis clinical organizations and individual doctors, but did not get a satisfactory response.
In 2004, he filed a qui tam lawsuit under the federal False Claims Act, which provides an avenue for individuals to sue for fraud on behalf of the federal government.
Cantor alleged that Quest caused health care providers to bill Medicare and other federal programs for faulty medical tests and unnecessary treatments. The complaint said that Quest marketed the kits between 2000 and 2006 while making claims that the company knew to be inaccurate.
DoJ subpoenaed Quest in late 2004. Nichols Institute initiated a recall on 13,750 units of the Bio-Intact assay in March 2005.
As part of the April 15 settlement, Nichols pleaded guilty to a felony misbranding charge in violation of the Food, Drug and Cosmetic Act (FDCA), paying a criminal fine of $40 million.
The other $262 million of the pay-out settles civil False Claims Act charges. Quest, which also will pay another $6.2 million to settle similar civil claims with various state Medicaid programs, does not admit wrongdoing on the civil allegations. The company said April 15 that it agreed to the settlement, including a corporate integrity agreement, "to put the matter behind it."
As the initiator of the suit, Cantor will receive about $45 million of the settlement funds, which he says he will use to fund research into antibody therapies to treat drug-resistant infections.
Core Legal Focus On Product Safety Is Unusual
According to Erika A. Kelton, Cantor's attorney with Phillips & Cohen, a firm specializing in qui tam suits, this was an unusual case. "I think it is the first of its kind that is about defective and medically unnecessary tests," she said. Typically, False Claims Act suits involving diagnostics center on fraudulent Medicare billing practices, she said.
Another issue that has resulted in a number of high-profile settlements between the federal government and device firms are kickback allegations, such as in the 2007 settlement with five hip and knee implant makers (1"The Gray Sheet" Oct. 1, 2007, p. 3) and 2008 settlement with Bayer Healthcare over payments made to diabetes device suppliers (2"The Gray Sheet" Dec. 1, 2008, In Brief).
DoJ cases that have focused more exclusively on FDCA issues tend to target products marketed without FDA approval, or marketed for an indication not included in FDA-approved labeling. For instance, three former sales representatives from Stryker have pled guilty in federal court in the past year, most recently on April 14, to promoting a bone growth device "in a manner that was different from its FDA-approved use" (3"The Gray Sheet" Feb. 16, 2009, In Brief).
FDA criminal investigators say there has been an uptick in whistleblowers approaching the agency with product safety concerns, which may ultimately lead to more prosecutions on these issues (4"The Gray Sheet" April 7, 2008, p. 13).
But although Cantor approached FDA about the Advantage results "issue in 2001 and DoJ ultimately involved FDA's Office of Criminal Investigations in its qui tam investigation, the Quest case was apparently sparked separately from any FDA investigation.
"Even if the FDA did not exist, this would still be a False Claims Act case for two reasons," Kelton said.
"One is that, independently, we could establish that these were, in essence, defective products.... Also, Medicare requires that testing that is reimbursed by the government, or any service that is reimbursed by Medicare, be medically necessary. And, in essence, billing for a defective lab test was seeking reimbursement for medically unnecessary tests."
The attorney said she "would expect to see more of this kind of thing" in the future.
- David Filmore
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