Stryker Biotech, Executives Indicted for Illegal Promotion of Medical Devices

Stryker Biotech LLC, its former president and three current sales managers have been indicted for allegedly participating in the illegal promotion of medical devices used for invasive spinal and long bone surgeries and could face jail time and fines, according to the U.S. Attorney’s Office.

The names of those charged are: Mark Philip of Lexington, Mass., former president of the Hopkinton, Mass.-based Stryker Biotech; and sales managers William Heppner of Illinois, David Ard of California, and Jeff Whitaker of North Carolina.

Stryker Biotech and Mark Philip also were charged with making false statements to the U.S. Food and Drug Administration (FDA), according to the U.S. Attorney, and Stryker Biotech, Ard and Whitaker were charged with misbranding.

The indictment alleges that the defendants participated in an illegal marketing scheme to promote medical devices used during invasive surgeries, and in doing so have defrauded medical professionals and the FDA.

In particular, the defendants are alleged to have promoted devices known as OP-1 Implant and OP-1 Putty. These devices were used to stimulate bone growth in long bones and the spine. These devices were approved by the FDA only pursuant to a highly restrictive Humanitarian Device Exemption (“HDE”). One of the restrictions was that the device could only treat a condition that affected fewer than 4,000 patients in the United States, and could not be sold for a profit. The indictment charges that the defendants promoted the use of these devices in a manner that was different from its FDA approved use; namely they promoted a combination of the devices with a bone void filler, called Calstrux, and in furtherance of that promotion provided “recipes” to surgeons, medical technicians and others as to how to mix the OP-1 products with Calstrux.

The indictment also charges Stryker Biotech and Philip made false statements to the FDA about the number of patients that the firm was treating on an annual basis with OP-1 Putty.

If convicted of wire fraud, conspiracy, misbranding or false statements charges, Stryker Biotech faces fines of more than $500,000 or twice the gross gain or loss from the offense, on each count, according to the U.S. Attorney.

If convicted on wire fraud charges, Philip, Heppner, Ard and Whitaker each face up to 20 years imprisonment, followed by three years of supervised released and a fine of more than $250,000 or twice the gross gain or loss from the offense, on each count.

If convicted on the conspiracy charges, Philip, Heppner, Ard and Whitaker each face up to five years imprisonment, to be followed by three years of supervised release and fine of the greater of $250,000 or twice the gross gain or loss from the offense, on each count.

If convicted on misbranding charges, Ard and Whitaker each face up to three years imprisonment, to be followed by one year of supervised release and fine of the greater of $250,000 or twice the gross gain or loss from the offense on each charge. If convicted on the false statement charge, Philip faces up to five years imprisonment, to be followed by three years supervised release and fine of the greater of $250,000 or twice the gross gain or loss from the offense.

The case was investigated by the FDA-Office of Criminal Investigations, the Department of Health and Human Services, Office of Inspector General and the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Jeremy Sternberg of Loucks’ Health Care Fraud Unit.

Stryker Biotech in a statement said a conviction could have harsh results for the company monetarily, and in terms of participation in healthcare programs. “The company is disappointed with this action and still hopes to be able to reach a fair and just resolution of this matter. Conviction of these charges could result in significant monetary fines and Stryker Biotech’s exclusion from participating in federal and state healthcare programs, which could have a material affect on Stryker Biotech’s business. As a matter of company policy, Stryker will not have any further comment on these allegations.”