Baddley was speechless. Eight years before, her 83-year-old mother, Barbara Marcelino, had unexpectedly died during spine surgery. At the time, Baddley didn't question what had happened; surgery was always risky for a woman of that age. She was horrified when the agent told her that the surgeon had injected bone cement into her mother's spine and that the product -- which was not approved for that use -- may have played a role in her death.
The agent explained that the government had filed criminal charges against the maker of the cement, a company called Synthes, and four of its executives. After hanging up the phone, Baddley sat in stunned silence. "I was taken aback," she says. "I had no idea that anything like that had happened."
Most people have never heard of Synthes, a medical device maker headquartered in West Chester, Pa. But the company became part of one of the most recognizable names in health care in June when Johnson & Johnson (JNJ) completed the purchase of it for nearly $20 billion -- the largest acquisition in J&J's history. Market watchers cheered the deal, which will expand the company's stable of high-margin orthopedic products. J&J, which has endured a series of reputation-sullying recalls and lawsuits in recent years, specifically cited Synthes's "culture" and "values" as evidence of its appeal, even as former Synthes executives awaited sentencing on charges of grievous conduct.
In 2009 the U.S. attorney in Philadelphia accused the company of running illegal clinical trials -- essentially, experimenting on humans. Between 2002 and 2004, Synthes had tested a product called Norian XR, a cement that has a unique capacity to turn into bone when injected into the human skeleton. The Food and Drug Administration explicitly told Synthes not to promote Norian for certain spine surgeries, but the company pushed forward anyway. At least five patients who had Norian injected into their spines died on the operating-room table. One was Barbara Marcelino.
The indictment of Synthes and its executives shook the health care industry. What occurred is a classic example of corporate malfeasance, but set inside an insular corporation run by a reclusive and autocratic Swiss multibillionaire, the provider of the largest individual gift in the history of Harvard University. The case offers a rare, sometimes disturbing, glimpse inside the shrouded world of medical devices, where surgeons occasionally turn for advice during operations to twenty something sales representatives.
Most of all, this is a story about a company that repeatedly ignored evidence of potential lethal consequences. Interviews with more than 20 former employees and surgeons involved in the Norian project, hundreds of pages of court transcripts, and company documents submitted in the case reveal that Synthes not only disregarded multiple warnings that it was flouting the rules, but also brushed off scientists' cautions that the cement could cause fatal blood clots.VV The Department of Justice targeted four high-ranking executives, all of whom pleaded guilty to a misdemeanor under an unusual provision of health care law called the Responsible Corporate Officer Doctrine. They accepted responsibility for the company's crime of running unauthorized clinical trials and for engaging in off-label marketing, or promoting products for unapproved uses, without conceding that they were involved in the crime. At the time, no executive had ever gone to prison for such a charge.
(Lawyers for the four executives declined to make their clients available for interviews or to comment on the facts of the case.)
Off-label marketing is so common among drug and device makers that it's often dismissed as the equivalent of driving slightly over the speed limit. During the past decade, pharmaceutical behemoths such as Merck (MRK), Pfizer (PFE), Abbott Labs (ABT), and GlaxoSmithKline (GSK) have paid billions in fines to settle charges that they engaged in off-label drug promotion. Yet cases continue to happen, in part because the potential profits often exceed the fines.
But this wasn't the typical off-label marketing case. Nor was it typical of trials for medical devices or drugs. Patients sometimes die during such clinical trials -- but only after being advised of the risks and then granting their consent. In hiding the unapproved status of the cement, prosecutors argued, Synthes denied patients the right to choose whether they wanted to be test subjects.
For the Justice Department, the Synthes case posed an unprecedented opportunity. It could finally hold individual businessmen accountable for their actions. Mary Crawley, the assistant U.S. attorney who led the prosecution, urged the court to send the executives to jail for their "venal crime." The "callous disregard of patient safety," she argued, "warrants the highest sentence the law will allow."
Read the entire story at CNN’s website.
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