Medical Device Maker ev3 Agrees to Plead Guilty and Pay $17.9 Million for Distributing Adulterated Device

BOSTON – The U.S. Attorney’s office announced today that Minnesota-based medical device manufacturer ev3 Inc. (ev3), has agreed to plead guilty to charges related to the distribution of its neurovascular medical device, Onyx Liquid Embolic System, and pay $17.9 million in fines and forfeiture.

“ev3 disregarded laws designed to protect patient safety,” said United States Attorney Andrew E. Lelling. “The U.S. Attorney’s Office is committed to protecting patients and the integrity of federal health care programs, and we will continue to use our criminal authority to ensure that medical device manufacturers play by the rules that protect the public and ensure quality of care.”

“The Department of Justice will hold corporations accountable when they violate laws designed to protect consumers and protect public funds,” said Assistant Attorney General Joseph H. Hunt, of the Department of Justice’s Civil Division. “This resolution demonstrates the Department’s continued commitment to protect taxpayer dollars and deter companies from putting profits before patient safety.”

“Consumers rely on the FDA to ensure that there’s a reasonable assurance of safety and effectiveness for the approved uses of medical devices. When manufacturers ignore the FDA’s regulatory authority, they undermine these crucial assurances and put lives at risk. Our Office of Criminal Investigations investigated a bad actor who marketed their device for unapproved uses, potentially harming patients,” said FDA Commissioner Scott Gottlieb, M.D. “The ev3 agreement to plead guilty announced by the U.S. Department of Justice today is an example of the FDA’s comprehensive commitment to ensuring the safety of medical devices and investigating companies that put patients at risk. A key part of our overall efforts to promote safe and effective innovation and protect patients is our enforcement work related to unsafe practices and bad actors. In addition to investigating such activities, we’re advancing other new policies to assure post-market device safety, as we recently outlined in our Medical Device Safety Action Plan. The FDA is also committed to fully implementing a new active surveillance system that will enable the agency to harness real-world evidence from medical records and patient registries to more swiftly identify device safety issues and enable more informed decision-making.”

Pursuant to a criminal information filed in federal court in Boston today, the United States charged ev3 with violations of the Food, Drug and Cosmetic Act. As part of the criminal resolution, ev3 has agreed to plead guilty to a misdemeanor offense, to pay a criminal fine of $11.9 million, and to forfeit $6 million.

According to court documents, Onyx was approved by the U.S. Food and Drug Administration (FDA) as a liquid embolization device that is surgically injected into blood vessels to block blood flow to arteriovenous malformations in the brain. The FDA has approved Onyx only for use inside the brain. Despite the FDA’s limited approval of Onyx, from 2005 to 2009, ev3 sales representatives encouraged surgeons to use Onyx in large quantities for unproven and potentially dangerous surgical uses outside the brain. The company’s sales force continued to tout unapproved and potentially dangerous uses of Onyx even after FDA officials told ev3 executives in 2008 that they had specific safety concerns regarding uses of Onyx outside the brain. FDA officials told ev3 executives that a study would be required to gain approval for uses of Onyx outside the brain and to ensure that the benefits of the device outweighed the risks.

Rather than conduct a study to ensure the safety and effectiveness of Onyx for uses outside the brain, ev3’s sales representatives attended surgical procedures and provided explicit instructions to surgeons regarding how to use Onyx for unapproved surgical procedures outside the brain, including in greater quantities than would be used in the brain. According to the criminal information, ev3’s management also set up a system of sales quotas and bonuses that incentivized sales representatives to sell Onyx for unapproved uses and trained the sales force to instruct physicians on unapproved uses of the device.

“The American people, as both taxpayers and consumers, expect medical device manufacturers like EV3 to abide by relevant laws and regulations,” stated HHS-OIG Special Agent in Charge Phillip Coyne. “When medical device companies take shortcuts in order to boost profits, it erodes public confidence in the health care system, compromises patient safety, and wastes taxpayer funds intended for healthcare programs that help the most vulnerable members of society. We will continue to investigate allegations of fraud in close cooperation with our law enforcement partners.”

“This sends a clear message that VA OIG and our federal partners will vigorously investigate healthcare fraud and hold companies accountable,” said Sean J. Smith, Special Agent in Charge of the Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division, Northeast Field Office.

“Incentivizing employees to promote surgical devices outside approved protocols violates FDA regulations, places patients at risk, and are unacceptable business practices.  In this case, ev3 ignored serious patient safety concerns when it gave sales representatives the green light to promote its device for unapproved uses. Today’s plea and settlement demonstrate the FBI’s commitment to holding companies accountable who violate regulations solely intended to protect the public,” said Harold H. Shaw, Special Agent in Charge of the FBI Boston Division. “The FBI’s Health Care Fraud program will continue to investigate companies like ev3 that promote dangerous sales tactics that pose unacceptable risk to patient safety.”

ev3 was acquired by Covidien LP in 2010, subsequent to the course of criminal conduct covered by the plea agreement. Covidien was then acquired by Medtronic in 2015. Although Medtronic played no role in the criminal conduct, the company has agreed to implement new compensation structures to ensure the sales force responsible for marketing Onyx is not incentivized to sell the device for unapproved uses. Medtronic has also agreed to conduct compliance monitoring related to Onyx sales and marketing.

U.S. Attorney Lelling, Assistant Attorney General Hunt, FDA Commissioner Gottlieb, HHS-OIG SAC Coyne, VA-OIG SAC Smith, and FBI Boston SAC Shaw made the announcement today. This matter was handled by Assistant U.S. Attorneys Gregg Shapiro, Chief of Lelling’s Affirmative Civil Enforcement Unit, Nathaniel Yeager, Chief of Lelling’s Health Care Fraud Unit, and Christopher Looney of Lelling’s Health Care Fraud Unit, and Trial Attorney Matthew Lash of the Justice Department’s Consumer Protection Branch.